G.R. No.
175587 September 21, of Court, petitioner alleged that (1) respondent
2007
PHILIPPINE COMMERCIAL
INTERNATIONAL BANK, Petitioner,
vs.
JOSEPH ANTHONY M. ALEJANDRO,
Respondent.
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the May 31, 2006
Decision1 of the Court of Appeals in CA-G.R. CV
No. 78200 affirming the August 30, 2000
Decision2 of the Regional Trial Court of Makati,
which granted respondent Joseph Anthony M.
Alejandro’s claim for damages arising from
petitioner Philippine Commercial International
Bank’s (PCIB) invalid garnishment of
respondent’s deposits.
On October 23, 1997, petitioner filed against
respondent a complaint3 for sum of money with
prayer for the issuance of a writ of preliminary
attachment. Said complaint alleged that on
September 10, 1997, respondent, a resident of
Hong Kong, executed in favor of petitioner a
promissory note obligating himself to pay
₱249,828,588.90 plus interest. In view of the
fluctuations in the foreign exchange rates which
resulted in the insufficiency of the deposits
assigned by respondent as security for the loan,
petitioner requested the latter to put up
additional security for the loan. Respondent,
however, sought a reconsideration of said
request pointing out petitioner’s alleged
mishandling of his account due to its failure to
carry out his instruction to close his account as
early as April 1997, when the prevailing rate of
exchange of the US Dollar to Japanese yen was
US$1.00:JPY127.50.4 It appears that the
amount of ₱249,828,588.90 was the
consolidated amount of a series of yen loans
granted by petitioner to respondent during the
months of February and April 1997.5
In praying for the issuance of a writ of
preliminary attachment under Section 1
paragraphs (e) and (f) of Rule 57 of the Rules
his home address in Quezon City and/or his
fraudulently withdrew his unassigned deposits
notwithstanding his verbal promise to PCIB
Assistant Vice President Corazon B.
Nepomuceno not to withdraw the same prior to
their assignment as security for the loan; and
(2) that respondent is not a resident of the
Philippines. The application for the issuance of a
writ was supported with the affidavit of
Nepomuceno.6
On October 24, 1997, the trial court granted the
application and issued the writ ex parte7 after
petitioner posted a bond in the amount of
₱18,798,734.69, issued by Prudential
Guarantee & Assurance Inc., under Bond No.
HO-46764-97. On the same date, the bank
deposits of respondent with Rizal Commercial
Banking Corporation (RCBC) were garnished.
On October 27, 1997, respondent, through
counsel, filed a manifestation informing the
court that he is voluntarily submitting to its
jurisdiction.8
Subsequently, respondent filed a motion to
quash9 the writ contending that the withdrawal
of his unassigned deposits was not fraudulent as
it was approved by petitioner. He also alleged
that petitioner knew that he maintains a
permanent residence at Calle Victoria, Ciudad
Regina, Batasan Hills, Quezon City, and an
office address in Makati City at the Law Firm
Romulo Mabanta Buenaventura Sayoc & De los
Angeles, 10 where he is a partner. In both
addresses, petitioner regularly communicated
with him through its representatives.
Respondent added that he is the managing
partner of the Hong Kong branch of said Law
Firm; that his stay in Hong Kong is only
temporary; and that he frequently travels back
to the Philippines.
On December 24, 1997, the trial court issued an
order quashing the writ and holding that the
withdrawal of respondent’s unassigned deposits
was not intended to defraud petitioner. It also
found that the representatives of petitioner
personally transacted with respondent through
office in Makati City. It thus concluded that
petitioner misrepresented and suppressed the
facts regarding respondent’s residence
considering that it has personal and official
knowledge that for purposes of service of
summons, respondent’s residence and office
addresses are located in the Philippines. The
dispositive portion of the court’s decision is as
follows:
WHEREFORE, the URGENT MOTION TO QUASH,
being meritorious, is hereby GRANTED, and the
ORDER of 24 October 1997 is hereby
RECONSIDERED and SET ASIDE and the WRIT
OF attachment of the same is hereby
DISCHARGED.
SO ORDERED.11
With the denial12 of petitioner’s motion for
reconsideration, it elevated the case to the
Court of Appeals (CA-G.R. SP No. 50748) via a
petition for certiorari. On May 10, 1999, the
petition was dismissed for failure to prove that
the trial court abused its discretion in issuing the
aforesaid order.13 Petitioner filed a motion for
reconsideration but was denied on October 28,
1999.14 On petition with this Court, the case was
dismissed for late filing in a minute resolution
(G.R. No. 140605) dated January 19, 2000.15
Petitioner filed a motion for reconsideration but
was likewise denied with finality on March 6,
2000.16
Meanwhile, on May 20, 1998, respondent filed a
claim for damages in the amount of P25 Million17
on the attachment bond (posted by Prudential
Guarantee & Assurance, Inc., under JCL(4) No.
01081, Bond No. HO-46764-97) on account of
the wrongful garnishment of his deposits. He
presented evidence showing that his
₱150,000.00 RCBC check payable to his counsel
as attorney’s fees, was dishonored by reason of
the garnishment of his deposits. He also
testified that he is a graduate of the Ateneo de
Manila University in 1982 with a double degree
of Economics and Management Engineering and
of the University of the Philippines in 1987 with
the degree of Bachelor of Laws. Respondent
likewise presented witnesses to prove that he is
a well known lawyer in the business community
both in the Philippines and in Hong Kong.18 For
its part, the lone witness presented by petitioner
was Nepomuceno who claimed that she acted in
good faith in alleging that respondent is a
resident of Hong Kong.19
On August 30, 2000, the trial court awarded
damages to respondent in the amount of P25
Million without specifying the basis thereof,
thus:
WHEREFORE, premises above considered, and
defendant having duly established his claim in
the amount of ₱25,000,000.00, judgment is
hereby rendered ordering Prudential Guarantee
& [Assurance] Co., which is solidarily liable with
plaintiff to pay defendant the full amount of
bond under Prudential Guarantee & Assurance,
Inc. JCL(4) No. 01081, [Bond No. HO-46764-
97], dated 24 October 1997 in the amount of
₱18,798,734.69. And, considering that the
amount of the bond is insufficient to fully satisfy
the award for damages, plaintiff is hereby
ordered to pay defendant the amount of
₱6,201,265.31.
SO ORDERED.20
The trial court denied petitioner’s motion for
reconsideration on October 24, 2000.21
Petitioner elevated the case to the Court of
Appeals which affirmed the findings of the trial
court. It held that in claiming that respondent
was not a resident of the Philippines, petitioner
cannot be said to have been in good faith
considering that its knowledge of respondent’s
Philippine residence and office address goes into
the very issue of the trial court’s jurisdiction
which would have been defective had
respondent not voluntarily appeared before it.
The Court of Appeals, however, reduced the
amount of damages awarded to petitioner and
specified their basis. The dispositive portion of
the decision of the Court of Appeals states:
WHEREFORE, the appeal is PARTIALLY
GRANTED and the decision appealed from is
hereby MODIFIED. The award of damages in the
amount of ₱25,000,000.00 is deleted. In lieu
thereof, Prudential Guarantee & [Assurance,
Inc.], which is solidarily liable with appellant
[herein petitioner], is ORDERED to pay appellee
[herein respondent] ₱2,000,000.00 as nominal
damages; ₱5,000,000.00 as moral damages;
and ₱1,000,000.00 as attorney’s fees, to be
satisfied against the attachment bond under
Prudential Guarantee & Assurance, Inc. JCL (4)
No. 01081.
SO ORDERED.22
Both parties moved for reconsideration. On
November 21, 2006, the Court of Appeals
denied petitioner’s motion for reconsideration
but granted that of respondent’s by ordering
petitioner to pay additional ₱5Million as
exemplary damages.23
Hence, the instant petition.
At the outset, it must be noted that the ruling of
the trial court that petitioner is not entitled to a
writ of attachment because respondent is a
resident of the Philippines and that his act of
withdrawing his deposits with petitioner was
without intent to defraud, can no longer be
passed upon by this Court. More importantly,
the conclusions of the court that petitioner bank
misrepresented that respondent was residing
out of the Philippines and suppressed the fact
that respondent has a permanent residence in
Metro Manila where he may be served with
summons, are now beyond the power of this
Court to review having been the subject of a
final and executory order. Said findings were
sustained by the Court of Appeals in CA-G.R. SP
No. 50784 and by this Court in G.R. No. 140605.
The rule on conclusiveness of judgment, which
obtains under the premises, precludes the
relitigation of a particular fact or issue in
another action between the same parties even
if based on a different claim or cause of action.
The judgment in the prior action operates as
estoppel as to those matters in issue or points
controverted, upon the determination of which
the finding or judgment was rendered. The
previous judgment is conclusive in the second
case, as to those matters actually and directly
controverted and determined.24 Hence, the
issues of misrepresentation by petitioner and
the residence of respondent for purposes of
service of summons can no longer be
questioned by petitioner in this case.
The core issue for resolution is whether
petitioner bank is liable for damages for the
improper issuance of the writ of attachment
against respondent.
We rule in the affirmative.
Notwithstanding the final judgment that
petitioner is guilty of misrepresentation and
suppression of a material fact, the latter
contends that it acted in good faith. Petitioner
also contends that even if respondent is
considered a resident of the Philippines,
attachment is still proper under Section 1,
paragraph (f), Rule 57 of the Rules of Court
since he (respondent) is a resident who is
temporarily out of the Philippines upon whom
service of summons may be effected by
publication.
Petitioner’s contentions are without merit.
While the final order of the trial court which
quashed the writ did not categorically use the
word "bad faith" in characterizing the
representations of petitioner, the tenor of said
order evidently considers the latter to have
acted in bad faith by resorting to a deliberate
strategy to mislead the court. Thus –
In the hearings of the motion, and oral
arguments of counsels before the Court, it
appears that plaintiff BANK through its
contracting officers Vice President Corazon B.
Nepomuceno and Executive Vice President Jose
Ramon F. Revilla, personally transacted with
defendant mainly through defendant’s
permanent residence in METRO-MANILA, either
in defendant’s home address in Quezon City or
his main business address at the Romulo
Mabanta Buenaventura Sayoc & Delos Angeles
in MAKATI and while at times follow ups were
made through defendant’s temporary home and
business addresses in Hongkong. It is therefore
clear that plaintiff could not deny their personal
and official knowledge that defendant’s
permanent and official residence for purposes of
service of summons is in the Philippines. In fact,
this finding is further confirmed by the letter of
Mr. JOHN GOKONGWEI, JR. Chairman,
Executive Committee of plaintiff BANK, in his
letter dated 6 October 1997 on the subject loan
to defendant of the same law firm was
addressed to the ROMULO LAW FIRM in MAKATI.
[Anent the] second ground of attachment x x x
[t]he Court finds that the amount withdrawn
was not part of defendant’s peso deposits
assigned with the bank to secure the loan and
as proof that the withdrawal was not intended
to defraud plaintiff as creditor is that plaintiff
approved and allowed said withdrawals. It is
even noted that when the Court granted the
prayer for attachment it was mainly on the first
ground under Section 1(f) of Rule 57 of the 1997
Rules of Civil Procedure, that defendant resides
out of the Philippines.
On the above findings, it is obvious that plaintiff
already knew from the beginning the deficiency
of its second ground for attachment [i.e.,]
disposing properties with intent to defraud his
creditors, and therefore plaintiff had to resort to
this misrepresentation that defendant was
residing out of the Philippines and suppressed
the fact that defendant’s permanent residence
is in METRO MANILA where he could be served
with summons.
On the above findings, and mainly on the
misrepresentations made by plaintiff on the
grounds for the issuance of the attachment in
the verified complaint, the Court concludes that
defendant has duly proven its grounds in the
MOTION and that plaintiff is not entitled to the
attachment.25
Petitioner is therefore barred by the principle of
conclusiveness of judgment from again invoking
good faith in the application for the issuance of
the writ. Similarly, in the case of Hanil
Development Co., Ltd. v. Court of Appeals,26 the
Court debunked the claim of good faith by a
party who maliciously sought the issuance of a
writ of attachment, the bad faith of said party
having been previously determined in a final
decision which voided the assailed writ. Thus –
Apropos the Application for Judgment on the
Attachment Bond, Escobar claims in its petition
that the award of attorney’s fees and injunction
bond premium in favor of Hanil is [contrary] to
law and jurisprudence. It contends that no
malice or bad faith may be imputed to it in
procuring the writ.
Escobar’s protestation is now too late in the day.
The question of the illegality of the attachment
and Escobar’s bad faith in obtaining it has long
been settled in one of the earlier incidents of this
case. The Court of Appeals, in its decision
rendered on February 3, 1983 in C.A.-G.R. No.
SP-14512, voided the challenged writ, having
been issued with grave abuse of discretion.
Escobar’s bad faith in procuring the writ cannot
be doubted. Its Petition for the Issuance of
Preliminary Attachment made such damning
allegations that: Hanil was already able to
secure a complete release of its final collection
from the MPWH; it has moved out some of its
heavy equipments for unknown destination, and
it may leave the country anytime. Worse, its Ex
Parte Motion to Resolve Petition alleged that
"after personal verification by (Escobar) of
(Hanil’s) equipment in Cagayan de Oro City, it
appears that the equipments were no longer
existing from their compound." All these
allegations of Escobar were found to be totally
baseless and untrue.
Even assuming that the trial court did not make
a categorical pronouncement of
misrepresentation and suppression of material
facts on the part of petitioner, the factual
backdrop of this case does not support
petitioner’s claim of good faith. The facts and
circumstances omitted are highly material and
relevant to the grant or denial of writ of
attachment applied for.
Finally, there is no merit in petitioner’s
contention that respondent can be considered a
resident who is temporarily out of the
Philippines upon whom service of summons may
be effected by publication, and therefore
qualifies as among those against whom a writ of
attachment may be issued under Section 1,
paragraph (f), Rule 57 of the Rules of Court
which provides:
(f) In an action against a party x x x on whom
summons may be served by publication.
In so arguing, petitioner attempts to give the
impression that although it erroneously invoked
the ground that respondent does not reside in
the Philippines, it should not be made to pay
damages because it is in fact entitled to a writ
of attachment had it invoked the proper ground
under Rule 57. However, even on this
alternative ground, petitioner is still not entitled
to the issuance of a writ of attachment.
The circumstances under which a writ of
preliminary attachment may be issued are set
forth in Section 1, Rule 57 of the Rules of Court,
to wit:
SEC. 1. Grounds upon which attachment may
issue. — At the commencement of the action or
at any time before entry of judgment, a plaintiff
or any proper party may have the property of
the adverse party attached as security for the
satisfaction of any judgment that may be
recovered in the following cases:
(a) In an action for the recovery of a specified
amount of money or damages, other than moral
and exemplary, on a cause of action arising
from law, contract, quasi-contract, delict or
quasi-delict against a party who is about to
depart from the Philippines with intent to
defraud his creditors;
(b) In an action for money or property
embezzled or fraudulently misapplied or
converted to his own use by a public officer, or
an officer of a corporation or an attorney, factor,
broker, agent, or clerk, in the course of his
employment as such, or by any other person in
a fiduciary capacity, or for a willful violation of
duty;
(c) In an action to recover the possession of
personal property unjustly or fraudulently
taken, detained, or converted, when the
property, or any part thereof, has been
concealed, removed, or disposed of to prevent
its being found or taken by the applicant or an
authorized person;
(d) In an action against a party who has been
guilty of a fraud in contracting the debt or
incurring the obligation upon which the action is
brought, or in the performance thereof;
(e) In an action against a party who has
removed or disposed of his property, or is about
to do so, with intent to defraud his creditors;
(f) In an action against a party who resides out
of the Philippines, or on whom summons may
be served by publication.
The purposes of preliminary attachment are: (1)
to seize the property of the debtor in advance of
final judgment and to hold it for purposes of
satisfying said judgment, as in the grounds
stated in paragraphs (a) to (e) of Section 1, Rule
57 of the Rules of Court; or (2) to acquire
jurisdiction over the action by actual or
constructive seizure of the property in those
instances where personal or substituted service
of summons on the defendant cannot be
effected, as in paragraph (f) of the same
provision.27
Corollarily, in actions in personam, such as the
instant case for collection of sum of money,28
summons must be served by personal or
substituted service, otherwise the court will not
acquire jurisdiction over the defendant. In case
the defendant does not reside and is not found
in the Philippines (and hence personal and
substituted service cannot be effected), the
remedy of the plaintiff in order for the court to
acquire jurisdiction to try the case is to convert
the action into a proceeding in rem or quasi in
rem by attaching the property of the
defendant.29 Thus, in order to acquire
jurisdiction in actions in personam where
defendant resides out of and is not found in the
Philippines, it becomes a matter of course for
the court to convert the action into a proceeding
in rem or quasi in rem by attaching the
defendant’s property. The service of summons
in this case (which may be by publication
coupled with the sending by registered mail of
the copy of the summons and the court order to
the last known address of the defendant), is no
longer for the purpose of acquiring jurisdiction
but for compliance with the requirements of due
process.30
However, where the defendant is a resident who
is temporarily out of the Philippines, attachment
of his/her property in an action in personam, is
not always necessary in order for the court to
acquire jurisdiction to hear the case.
Section 16, Rule 14 of the Rules of Court reads:
Sec. 16. Residents temporarily out of the
Philippines. – When an action is commenced
against a defendant who ordinarily resides
within the Philippines, but who is temporarily
out of it, service may, by leave of court, be also
effected out of the Philippines, as under the
preceding section.
The preceding section referred to in the above
provision is Section 15 which provides for
extraterritorial service – (a) personal service out
of the Philippines, (b) publication coupled with
the sending by registered mail of the copy of the
summons and the court order to the last known
address of the defendant; or (c) in any other
manner which the court may deem sufficient.
In Montalban v. Maximo,31 however, the Court
held that substituted service of summons
(under the present Section 7, Rule 14 of the
Rules of Court) is the normal mode of service of
summons that will confer jurisdiction on the
court over the person of residents temporarily
out of the Philippines. Meaning, service of
summons may be effected by (a) leaving copies
of the summons at the defendant’s residence
with some person of suitable discretion residing
therein, or (b) by leaving copies at the
defendant’s office or regular place of business
with some competent person in charge
thereof.32 Hence, the court may acquire
jurisdiction over an action in personam by mere
substituted service without need of attaching
the property of the defendant.
The rationale in providing for substituted service
as the normal mode of service for residents
temporarily out of the Philippines, was
expounded in Montalban v. Maximo,33 in this
wise:
A man temporarily absent from this country
leaves a definite place of residence, a dwelling
where he lives, a local base, so to speak, to
which any inquiry about him may be directed
and where he is bound to return. Where one
temporarily absents himself, he leaves his
affairs in the hands of one who may be
reasonably expected to act in his place and
stead; to do all that is necessary to protect his
interests; and to communicate with him from
time to time any incident of importance that
may affect him or his business or his affairs. It
is usual for such a man to leave at his home or
with his business associates information as to
where he may be contacted in the event a
question that affects him crops up.
Thus, in actions in personam against residents
temporarily out of the Philippines, the court
need not always attach the defendant’s property
in order to have authority to try the case. Where
the plaintiff seeks to attach the defendant’s
property and to resort to the concomitant
service of summons by publication, the same
must be with prior leave, precisely because, if
the sole purpose of the attachment is for the
court to acquire jurisdiction, the latter must
determine whether from the allegations in the
complaint, substituted service (to persons of
suitable discretion at the defendant’s residence
or to a competent person in charge of his office
or regular place of business) will suffice, or
whether there is a need to attach the property
of the defendant and resort to service of
summons by publication in order for the court
to acquire jurisdiction over the case and to
comply with the requirements of due process.
In the instant case, it must be stressed that the
writ was issued by the trial court mainly on the
representation of petitioner that respondent is
not a resident of the Philippines.34 Obviously,
the trial court’s issuance of the writ was for the
sole purpose of acquiring jurisdiction to hear
and decide the case. Had the allegations in the
complaint disclosed that respondent has a
residence in Quezon City and an office in Makati
City, the trial court, if only for the purpose of
acquiring jurisdiction, could have served
summons by substituted service on the said
addresses, instead of attaching the property of
the defendant. The rules on the application of a
writ of attachment must be strictly construed in
favor of the defendant. For attachment is harsh,
extraordinary, and summary in nature; it is a
rigorous remedy which exposes the debtor to
humiliation and annoyance.35 It should be
resorted to only when necessary and as a last
remedy.
It is clear from the foregoing that even on the
allegation that respondent is a resident
temporarily out of the Philippines, petitioner is
still not entitled to a writ of attachment because
the trial court could acquire jurisdiction over the
case by substituted service instead of attaching
the property of the defendant. The
misrepresentation of petitioner that respondent
does not reside in the Philippines and its
omission of his local addresses was thus a
deliberate move to ensure that the application
for the writ will be granted.
In light of the foregoing, the Court of Appeals
properly sustained the finding of the trial court
that petitioner is liable for damages for the
wrongful issuance of a writ of attachment
against respondent.
Anent the actual damages, the Court of Appeals
is correct in not awarding the same inasmuch as
the respondent failed to establish the amount
garnished by petitioner. It is a well settled rule
that one who has been injured by a wrongful
attachment can recover damages for the actual
loss resulting therefrom. But for such losses to
be recoverable, they must constitute actual
damages duly established by competent proofs,
which are, however, wanting in the present
case.36
Nevertheless, nominal damages may be
awarded to a plaintiff whose right has been
violated or invaded by the defendant, for the
purpose of vindicating or recognizing that right,
and not for indemnifying the plaintiff for any loss
suffered by him. Its award is thus not for the
purpose of indemnification for a loss but for the
recognition and vindication of a right. Indeed,
nominal damages are damages in name only
and not in fact.37 They are recoverable where
some injury has been done but the pecuniary
value of the damage is not shown by evidence
and are thus subject to the discretion of the
court according to the circumstances of the
case.38
In this case, the award of nominal damages is
proper considering that the right of respondent
to use his money has been violated by its
garnishment. The amount of nominal damages
must, however, be reduced from ₱2 million to
₱50,000.00 considering the short period of 2
months during which the writ was in effect as
well as the lack of evidence as to the amount
garnished.1âwphi1
Likewise, the award of attorney’s fees is proper
when a party is compelled to incur expenses to
lift a wrongfully issued writ of attachment. The
basis of the award thereof is also the amount of
money garnished, and the length of time
respondents have been deprived of the use of
their money by reason of the wrongful
attachment.39 It may also be based upon (1) the
amount and the character of the services
rendered; (2) the labor, time and trouble
involved; (3) the nature and importance of the
litigation and business in which the services
were rendered; (4) the responsibility imposed;
(5) the amount of money and the value of the
property affected by the controversy or involved
in the employment; (6) the skill and the
experience called for in the performance of the
services; (7) the professional character and the
social standing of the attorney; (8) the results
secured, it being a recognized rule that an
attorney may properly charge a much larger fee
when it is contingent than when it is not.40
All the aforementioned weighed, and
considering the short period of time it took to
have the writ lifted, the favorable decisions of
the courts below, the absence of evidence as to
the professional character and the social
standing of the attorney handling the case and
the amount garnished, the award of attorney’s
fees should be fixed not at ₱1 Million, but only
at ₱200,000.00.
The courts below correctly awarded moral
damages on account of petitioner’s
misrepresentation and bad faith; however, we
find the award in the amount of ₱5 Million
excessive. Moral damages are to be fixed upon
the discretion of the court taking into
consideration the educational, social and
financial standing of the parties.41 Moral
damages are not intended to enrich a
complainant at the expense of a defendant.42
They are awarded only to enable the injured
party to obtain means, diversion or
amusements that will serve to obviate the moral
suffering he has undergone, by reason of
petitioner’s culpable action. Moral damages
must be commensurate with the loss or injury
suffered. Hence, the award of moral damages is
reduced to ₱500,000.00.
Considering petitioner’s bad faith in securing the
writ of attachment, we sustain the award of
exemplary damages by way of example or
correction for public good. This should deter
parties in litigations from resorting to baseless
and preposterous allegations to obtain writs of
attachments. While as a general rule, the
liability on the attachment bond is limited to
actual (or in some cases, temperate or nominal)
damages, exemplary damages may be
recovered where the attachment was
established to be maliciously sued out.43
Nevertheless, the award of exemplary damages
in this case should be reduced from ₱5M to
₱500,000.00.
Finally, contrary to the claim of petitioner, the
instant case for damages by reason of the
invalid issuance of the writ, survives the
dismissal of the main case for sum of money.
Suffice it to state that the claim for damages
arising from such wrongful attachment may
arise and be decided separately from the merits
of the main action.44
WHEREFORE, the petition is PARTIALLY
GRANTED. The May 31, 2006 Decision of the
Court of Appeals in CA-G.R. CV No. 78200 is
AFFIRMED with MODIFICATIONS. As modified,
petitioner Philippine Commercial International
Bank is ordered to pay respondent Joseph
Anthony M. Alejandro the following amounts:
₱50,000.00 as nominal damages, ₱200,000.00
as attorney’s fees; and ₱500,000.00 as moral
damages, and ₱500,000.00 as exemplary
damages, to be satisfied against the attachment
bond issued by Prudential Guarantee &
Assurance Inc.,45 under JCL (4) No. 01081,
Bond No. HO-46764-97.
No pronouncement as to costs.
SO ORDERED.
[G.R. No. 93262. November 29, 1991.]
DAVAO LIGHT & POWER CO., INC.,
Petitioner, v. THE COURT OF APPEALS,
QUEENSLAND HOTEL or MOTEL or
QUEENSLAND TOURIST INN, and
TEODORICO ADARNA, Respondents.
Breva & Breva Law Offices for Petitioner.
Goc-Ong & Associates for Private
Respondents.
SYLLABUS
1. REMEDIAL LAW; ACTIONS; JURISDICTION;
HOW ACQUIRED. — An action or proceeding is
commenced by the filing of the complaint or
other initiatory pleading. By that act, the
jurisdiction of the court over the subject matter
or nature of the action or proceeding is invoked
or called into activity; and it is thus that the
court acquires jurisdiction over said subject
matter or nature of the action. And it is by that
self-same act of the plaintiff (or petitioner) of
filing the complaint (or other appropriate
pleading) — by which he signifies his submission
to the court’s power and authority — that
jurisdiction is acquired by the court over his
person. On the other hand, jurisdiction over the
person of the defendant is obtained, as above
stated, by the service of summons or other
coercive process upon him or by his voluntary
submission to the authority of the court.
2. ID.; PROVISIONAL REMEDIES; PRELIMINARY
ATTACHMENT; DEFINED. — A preliminary
attachment may be defined, paraphrasing the
Rules of Court, as the provisional remedy in
virtue of which a plaintiff or other proper party
may, at the commencement of the action or at
any time thereafter, have the property of the
adverse party taken into the custody of the
court as security for the satisfaction of any
judgment that may be recovered. It is a remedy
which is purely statutory in respect of which the
law requires a strict construction of the
provisions granting it. Withal no principle,
statutory or jurisprudential, prohibits its
issuance by any court before acquisition of
jurisdiction over the person of the defendant.
3. ID.; ID.; ID.; PHRASE "AT THE
COMMENCEMENT OF THE ACTION,"
CONSTRUED. — Rule 57 in fact speaks of the
grant of the remedy "at the commencement of
the action or at any time thereafter." The
phrase, "at the commencement of the action,"
obviously refers to the date of the filing of the
complaint — which, as above pointed out, is the
date that marks "the commencement of the
action;" and the reference plainly is to a time
before summons is served on the defendant, or
even before summons issues.
4. ID.; ID.; ID.; WRIT MAY BE ISSUED EX-
PARTE. — What the rule is saying quite clearly
is that after an action is properly commenced —
by the filing of the complaint and the payment
of all requisite docket and other fees — the
plaintiff may apply for and obtain a writ of
preliminary attachment upon fulfillment of the
pertinent requisites laid down by law, and that
he may do so at any time, either before or after
service of summons on the defendant. And this
indeed, has been the immemorial practice
sanctioned by the courts: for the plaintiff or
other proper party to incorporate the application
for attachment in the complaint or other
appropriate pleading (counterclaim, cross-
claim, third-party claim) and for the Trial Court
to issue the writ ex-parte at the commencement
of the action if it finds the application otherwise
sufficient in form and substance.
5. ID.; ID.; ID.; HEARING ON APPLICATION
THEREON, GENERALLY NOT NECESSARY. — In
Toledo v. Burgos this Court ruled that a hearing
on a motion or application for preliminary
attachment is not generally necessary unless
otherwise directed by the Trial Court in its
discretion. And in Filinvest Credit Corporation v.
Relova, the Court declared that" (n)othing in the
Rules of Court makes notice and hearing
indispensable and mandatory requisites for the
issuance of a writ of attachment."cralaw
virtua1aw library
6. ID.; ID.; ID.; ID.; BASIS OF GRANT. — The
only pre-requisite is that the Court be satisfied,
upon consideration of "the affidavit of the
applicant or of some other person who
personally knows the facts, that a sufficient
cause of action exists, that the case is one of
those mentioned in Section 1 . . . (Rule 57), that
there is no other sufficient security for the claim
sought to be enforced by the action, and that
the amount due to the applicant, or the value of
the property the possession of which he is
entitled to recover, is as much as the sum for
which the order (of attachment) is granted
above all legal counterclaims." If the court be so
satisfied, the "order of attachment shall be
granted," and the writ shall issue upon the
applicant’s posting of a bond executed to the
adverse party in an amount to be fixed by the
judge, not exceeding the plaintiff’s claim,
conditioned that the latter will pay all the costs
which may be adjudged to the adverse party
and all damages which he may sustain by
reason of the attachment, if the court shall
finally adjudge that the applicant was not
entitled thereto."cralaw virtua1aw library
7. ID.; ID.; ID.; ID.; REASON. — In Mindanao
Savings & Loan Association, Inc. v. Court of
Appeals, decided on April 18, 1989, decided on
April 18, 1989, this Court had occasion to
emphasize the postulate that no hearing is
required on an application for preliminary
attachment, with notice to the defendant, for
the reason that this "would defeat the objective
of the remedy . . . (since the) time which such
a hearing would take, could be enough to enable
the defendant to abscond or dispose of his
property before a writ of attachment issues." As
observed by a former member of this Court,
such a procedure would warn absconding
debtors-defendants of the commencement of
the suit against them and the probable seizure
of their properties, and thus give them the
advantage of time to hide their assets, leaving
the creditor-plaintiff holding the proverbial
empty bag; it would place the creditor-applicant
in danger of losing any security for a favorable
judgment and thus give him only an illusory
victory.
8. ID.; ID.; ID.; HOW DISCHARGED. — There
are two (2) ways of discharging an attachment:
first, by the posting of a counterbond; and
second, by a showing of its improper or irregular
issuance.
9. ID.; ID.; ID.; ID.; BY COUNTERBOND. — The
submission of a counterbond is an efficacious
mode of lifting an attachment already enforced
against property, or even of preventing its
enforcement altogether. When property has
already been seized under attachment, the
attachment may be discharged upon
counterbond in accordance with Section 12 of
Rule 57. But even before actual levy on
property, seizure under attachment may be
prevented also upon counterbond. The
defendant need not wait until his property is
seized before seeking the discharge of the
attachment by a counterbond. This is made
possible by Section 5 of Rule 57.
10. ID.; ID.; ID.; ID.; BY MOTION TO
DISCHARGE ON GROUND THAT THE SAME WAS
IRREGULARLY OR IMPROPERLY ISSUED. —
Aside from the filing of a counterbond, a
preliminary attachment may also be lifted or
discharged on the ground that it has been
irregularly or improperly issued, in accordance
with Section 13 of Rule 57. Like the first, this
second mode of lifting an attachment may be
resorted to even before any property has been
levied on. Indeed, it may be availed of after
property has been released from a levy on
attachment, as is made clear by said Section 13.
11. ID.; ID.; ID.; ID.; FIRST MODE SPEEDIER
THAN THE SECOND. — The filing of a
counterbond is a speedier way of discharging
the attachment writ maliciously sought out by
the attaching creditor instead of the other way,
which, in most instances . . . would require
presentation of evidence in a fullblown trial on
the merits, and cannot easily be settled in a
pending incident of the case.
12. ID.; ID.; ID.; MAY NOT BE DISSOLVED BY
A SHOWING OF ITS IRREGULAR OR IMPROPER
ISSUANCE. — (a) When an attachment may not
be dissolved by a showing of its irregular or
improper issuance:jgc:chanrobles.com.ph
". . . (W)hen the preliminary attachment is
issued upon a ground which is at the same time
the applicant’s cause of action e.g., ‘an action
for money or property embezzled or
fraudulently misapplied or converted to his own
use by a public officer, or an officer of a
corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment
as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty.’ (Sec.
1 [b], Rule 57), or ‘an action against a party who
has been guilty of fraud in contracting the debt
or incurring the obligation upon which the action
is brought’ (Sec. 1 [d], Rule 57), the defendant
is not allowed to file a motion to dissolve the
attachment under Section 13 of Rule 57 by
offering to show the falsity of the factual
averments in the plaintiffs application and
affidavits on which the writ was based — and
consequently that the writ based thereon had
been improperly or irregularly issued (SEE
Benitez v. I.A.C., 154 SCRA 41) — the reason
being that the hearing on such a motion for
dissolution of the writ would be tantamount to a
trial of the merits of the action. In other words,
the merits of the action would be ventilated at a
mere hearing of a motion, instead of at the
regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can
be dissolved is by a counterbond (G.B. Inc. v.
Sanchez, 98 Phil. 886)."cralaw virtua1aw library
13. ID.; ID.; ID.; DISSOLUTION OF
PRELIMINARY ATTACHMENT DOES NOT
DISCHARGE SURETIES ON BOND; REASON. —
." . . The dissolution of the preliminary
attachment upon security given, or a showing of
its irregular or improper issuance, does not of
course operate to discharge the sureties on
plaintiffs own attachment bond. The reason is
simple. That bond is ‘executed to the adverse
party, . . . conditioned that the . . . (applicant)
will pay all the costs which may be adjudged to
the adverse party and all damages which he
may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was
not entitled thereto’ (SEC. 4, Rule 57). Hence,
until that determination is made, as to the
applicant’s entitlement to the attachment, his
bond must stand and cannot be withdrawn."
DECISION
NARVASA, J.:
Subject of the appellate proceedings at bar is
the decision of the Court of Appeals in CA-G.R.
Sp. No. 1967 entitled "Queensland Hotel, Inc.,
etc. and Adarna v. Davao Light & Power Co.,
Inc., promulgated on May 4, 1990. 1 That
decision nullified and set aside the writ of
preliminary attachment issued by the Regional
Trial Court of Davao City 2 in Civil Case No.
19513-89 on application of the plaintiff (Davao
Light & Power Co.), before the service of
summons on the defendants (herein
respondents Queensland Co., Inc. and Adarna).
Following is the chronology of the undisputed
material facts culled from the Appellate
Tribunal’s judgment of May 4, 1990.
1. On May 2, 1989 Davao Light & Power Co.,
Inc. (hereafter, simply Davao Light) filed a
verified complaint for recovery of a sum of
money and damages against Queensland Hotel,
etc. and Teodorico Adarna (docketed as Civil
Case No. 19613-89). The complaint contained
an ex parte application for a writ of preliminary
attachment.
2. On May 3, 1989 Judge Nartatez, to whose
branch the case was assigned by raffle, issued
en Order granting the ex parte application and
fixing the attachment bond at P4,600,513.37.
3. On May 11, 1989 the attachment bond having
been submitted by Davao Light, the writ of
attachment issued.
4. On May 12, 1989, the summons and a copy
of the complaint, as well as the writ of
attachment and a copy of the attachment bond,
were served on defendants Queensland and
Adarna; and pursuant to the writ, the sheriff
seized properties belonging to the
latter.chanrobles.com:cralaw:red
5. On September 6, 1989, defendants
Queensland and Adarna filed a motion to
discharge the attachment for lack of jurisdiction
to issue the same because at the time the order
of attachment was promulgated (May 3, 1989)
and the attachment writ issued (May 11, 1989),
the Trial Court had not yet acquired jurisdiction
over the cause and over the persons of the
defendants.
6. On September 14, 1989, Davao Light filed an
opposition to the motion to discharge
attachment.
7. On September 19, 1989, the Trial Court
issued an Order denying the motion to
discharge.
This Order of September 19, 1989 was
successfully challenged by Queensland and
Adarna in a special civil action of certiorari
instituted by them in the Court of Appeals. The
Order was, as aforestated, annulled by the
Court of Appeals in its Decision of May 4, 1990.
The Appellate Court’s decision closed with the
following disposition:jgc:chanrobles.com.ph
". . . the Orders dated May 3, 1989 granting the
issuance of a writ of preliminary attachment,
dated September 19, 1989 denying the motion
to discharge attachment; dated November 7,
1989 denying petitioner’s motion for
reconsideration; as well as all other orders
emanating therefrom, specially the Writ of
Attachment dated May 11, 1989 and Notice of
Levy on Preliminary Attachment dated May 11,
1989, are hereby declared null and void and the
attachment hereby ordered
DISCHARGED."cralaw virtua1aw library
The Appellate Tribunal declared that — acquisition of jurisdiction over the person of the
". . .While it is true that a prayer for the issuance
of a writ of preliminary attachment may be
included in the complaint, as is usually done, it
is likewise true that the Court does not acquire
jurisdiction over the person of the defendant
until he in duly summoned or voluntarily
appears, and adding the phrase that it be issued
‘ex parte’ does not confer said jurisdiction
before actual summons had been made, nor
retroact jurisdiction upon summons being
made. . . ."cralaw virtua1aw library
It went on to say, citing Sievert v. Court of
Appeals, 3 that "in a proceedings in
attachment," the "critical time which must be
identified is . . . when the trial court acquires
authority under law to act coercively against the
defendant or his property . . .;" and that" critical
time is the time of the vesting of jurisdiction in
the court over the person of the defendant in
the main case."cralaw virtua1aw library
Reversal of this Decision of the Court of Appeals
of May 4, 1990 is what Davao Light seeks in the
present appellate proceedings.chanrobles
virtual lawlibrary
The question is whether or not a writ of
preliminary attachment may issue ex parte
against a defendant before acquisition of
jurisdiction of the latter’s person by service of
summons or his voluntary submission to the
Court’s authority.
The Court rules that the question must be
answered in the affirmative and that
consequently, the petition for review will have
to be granted.
It is incorrect to theorize that after an action or
proceeding has been commenced and
jurisdiction over the person of the plaintiff has
been vested in the court, but before the
defendant (either by service of summons or his
voluntary submission to the court’s authority),
nothing can be validly done by the plaintiff or
the court. It is wrong to assume that the validity
of acts done during this period should be
dependent on, or held in suspension until, the
actual obtention of jurisdiction over the
defendant’s person. The obtention by the court
of jurisdiction over the person of the defendant
is one thing; quite another is the acquisition of
jurisdiction over the person of the plaintiff or
over the subject-matter or nature of the action,
or the res or object thereof.
An action or proceeding is commenced by the
filing of the complaint or other initiatory
pleading. 4 By that act, the jurisdiction of the
court over the subject matter or nature of the
action or proceeding is invoked or called into
activity; 5 and it is thus that the court acquires
jurisdiction over said subject matter or nature
of the action. 6 And it is by that self-same act
of the plaintiff (or petitioner) of filing the
complaint (or other appropriate pleading) — by
which he signifies his submission to the court’s
power and authority — that jurisdiction is
acquired by the court over his person. 7 On the
other hand, jurisdiction over the person of the
defendant is obtained, as above stated, by the
service of summons or other coercive process
upon him or by his voluntary submission to the
authority of the court. 8 jurisprudential, prohibits its issuance by any
The events that follow the filing of the complaint
as a matter of routine are well known. After the
complaint is filed, summons issues to the
defendant, the summons is then transmitted to
the sheriff, and finally, service of the summons
is effected on the defendant in any of the ways
authorized by the Rules of Court. There is thus
ordinarily some appreciable interval of time
between the day of the filing of the complaint
and the day of service of summons of the
defendant. During this period, different acts
may be done by the plaintiff or by the Court,
which are of unquestionable validity and
propriety. Among these, for example, are the
appointment of a guardian ad litem, 9 the grant
of authority to the plaintiff to prosecute the suit
as a pauper litigant, 10 the amendment of the
complaint by the plaintiff as a matter of right
without leave of court, 11 authorization by the
Court of service of summons by publication, 12
the dismissal of the action by the plaintiff on
mere notice. 13
This, too, is true with regard to the provisional
remedies of preliminary attachment,
preliminary injunction, receivership or replevin.
14 They may be validly and properly applied for
and granted even before the defendant is
summoned or is heard
from.chanrobles.com:cralaw:red
A preliminary attachment may be defined,
paraphrasing the Rules of Court, as the
provisional remedy in virtue of which a plaintiff
or other proper party may, at the
commencement of the action or at any time
thereafter, have the property of the adverse
party taken into the custody of the court as
security for the satisfaction of any judgment
that may be recovered. 15 It is a remedy which
is purely statutory in respect of which the law
requires a strict construction of the provisions
granting it. 16 Withal no principle, statutory or
court before acquisition of jurisdiction over the
person of the defendant.
Rule 57 in fact speaks of the grant of the remedy
"at the commencement of the action or at any
time thereafter." 17 The phrase, "at the
commencement of the action," obviously refers
to the date of the filing of the complaint —
which, as above pointed out, is the date that
marks "the commencement of the action;" 18
and the reference plainly is to a time before
summons is served on the defendant, or even
before summons issues. What the rule is saying
quite clearly is that after an action is properly
commenced — by the filing of the complaint and
the payment of all requisite docket and other
fees — the plaintiff may apply for and obtain a
writ of preliminary attachment upon fulfillment
of the pertinent requisites laid down by law, and
that he may do so at any time, either before or
after service of summons on the defendant. And
this indeed, has been the immemorial practice
sanctioned by the courts: for the plaintiff or
other proper party to incorporate the application
for attachment in the complaint or other
appropriate pleading (counterclaim, cross-
claim, third-party claim) and for the Trial Court
to issue the writ ex-parte at the commencement
of the action if it finds the application otherwise
sufficient in form and substance.
In Toledo v. Burgos, 19 this Court ruled that a
hearing on a motion or application for
preliminary attachment is not generally
necessary unless otherwise directed by the Trial
Court in its discretion. 20 And in Filinvest Credit
Corporation v. Relova, 21 the Court declared
that" (n)othing in the Rules of Court makes
notice and hearing indispensable and
mandatory requisites for the issuance of a writ
of attachment." The only pre-requisite is that
the Court be satisfied, upon consideration of
"the affidavit of the applicant or of some other
person who personally knows the facts, that a
sufficient cause of action exists, that the case is
one of those mentioned in Section 1 . . . (Rule
57), that there is no other sufficient security for
the claim sought to be enforced by the action,
and that the amount due to the applicant, or the
value of the property the possession of which he
is entitled to recover, is as much as the sum for
which the order (of attachment) is granted
above all legal counterclaims." 22 If the court
be so satisfied, the "order of attachment shall
be granted," 23 and the writ shall issue upon
the applicant’s posting of a bond executed to the
adverse party in an amount to be fixed by the
judge, not exceeding the plaintiff’s claim,
conditioned that the latter will pay all the costs
which may be adjudged to the adverse party
and all damages which he may sustain by
reason of the attachment, if the court shall
finally adjudge that the applicant was not
entitled thereto." 24
In Mindanao Savings & Loan Association, Inc. v.
Court of Appeals, decided on April 18, 1989, 25
this Court had occasion to emphasize the
postulate that no hearing is required on an
application for preliminary attachment, with
notice to the defendant, for the reason that this
"would defeat the objective of the remedy . . .
(since the) time which such a hearing would
take, could be enough to enable the defendant
to abscond or dispose of his property before a
writ of attachment issues." As observed by a
former member of this Court, 26 such a
procedure would warn absconding debtors-
defendants of the commencement of the suit
against them and the probable seizure of their
properties, and thus give them the advantage of
time to hide their assets, leaving the creditor-
plaintiff holding the proverbial empty bag; it
would place the creditor-applicant in danger of
losing any security for a favorable judgment and
thus give him only an illusory victory.chanrobles
virtual lawlibrary
Withal, ample modes of recourse against a
preliminary attachment are secured by law to
the defendant. The relative ease with which a
preliminary attachment may be obtained is
matched and paralleled by the relative facility
with which the attachment may legitimately be
prevented or frustrated. These modes of
recourse against preliminary attachments
granted by Rule 57 were discussed at some
length by the separate opinion in Mindanao
Savings & Loans Asso. Inc. v. C.A., supra.
That separate opinion stressed that there are
two (2) ways of discharging an attachment:
first, by the posting of a counterbond; and
second, by a showing of its improper or irregular
issuance.
1.0. The submission of a counterbond is an
efficacious mode of lifting an attachment
already enforced against property, or even of
preventing its enforcement altogether.
1.1. When property has already been seized
under attachment, the attachment may be
discharged upon counterbond in accordance
with Section 12 of Rule 57.
‘SECTION 12. Discharge of attachment upon
giving counterbond. — At any time after an
order of attachment has been granted, the party
whose property has been attached or the person
appearing in his behalf, may, upon reasonable
notice to the applicant, apply to the judge who
granted the order, or to the judge of the court
in which the action is pending, for an order
discharging the attachment wholly or in part on
the security given . . . in an amount equal to the
value of the property attached as determined by
the judge to secure the payment of any
judgment that the attaching creditor may
recover in the action . . .’
1.2. But even before actual levy on property,
seizure under attachment may be prevented
also upon counterbond. The defendant need not
wait until his property is seized before seeking
the discharge of the attachment by a
counterbond. This is made possible by Section 5
of Rule 57.
‘SECTION 5. Manner of attaching property. —
The officer executing the order shall without
delay attach, to await judgment and execution
in the action, all the properties of the party
against whom the order is issued in the
province, not exempt from execution, or so
much thereof as may be sufficient to satisfy the
applicant’s demand, unless the former makes a
deposit with the clerk or judge of the court from
which the order issued, or gives a counter-bond
executed to the applicant, in an amount
sufficient to satisfy such demand besides costs,
or in an amount equal to the value of the
property which is about to be attached, to
secure payment to the applicant of any
judgment which he may recover in the action. .
. .’ (Emphasis supplied).
2.0. Aside from the filing of a counterbond, a
preliminary attachment may also be lifted or
discharged on the ground that it has been
irregularly or improperly issued, in accordance
with Section 13 of Rule 57. Like the first, this
second mode of lifting ar attachment may be
resorted to even before any property has been
levied on. Indeed, it may be availed of after
property has been released from a levy on
attachment, as is made clear by said Section 13,
viz.:chanrobles virtual lawlibrary
‘SECTION 13. Discharge of attachment for
improper or irregular issuance. — The party
whose property has been attached may also, at
any time either BEFORE or AFTER the release of
the attached property, or before any
attachment shall have been actually levied,
upon reasonable notice to the attaching
creditor, apply to the judge who granted the
order, or to the judge of the court in which the
action is pending, for an order to discharge the
attachment on the ground that the same was
improperly or irregularly issued. If the motion
be made on affidavits on the part of the party
whose property has been attached, but not
otherwise, the attaching creditor may oppose
the same by counter-affidavits or other
evidence in addition to that on which the
attachment was made. . . .’ (Emphasis
supplied).
This is so because" (a)s pointed out in Calderon
v. I.A.C., 155 SCRA 531 (1987), ‘The
attachment debtor cannot be deemed to have
waived any defect in the issuance of the
attachment writ by simply availing himself of
one way of discharging the attachment writ,
instead of the other. Moreover, the filing of a
counterbond is a speedier way of discharging
the attachment writ maliciously sought out by
the attaching creditor instead of the other way,
which, in most instances . . . would require
presentation of evidence in a fullblown trial on
the merits, and cannot easily be settled in a
pending incident of the case.’" 27
It may not be amiss to here reiterate other
related principles dealt with in Mindanao
Savings & Loans Asso. Inc. v. C.A., supra., 28
to wit:chanrob1es virtual 1aw library
(a) When an attachment may not be dissolved
by a showing of its irregular or improper
issuance:jgc:chanrobles.com.ph
". . . (W)hen the preliminary attachment is
issued upon a ground which is at the same time
the applicant’s cause of action e.g., ‘an action
for money or property embezzled or
fraudulently misapplied or converted to his own
use by a public officer, or an officer of a
corporation, or an attorney, factor, broker,
agent, or clerk, in the course of his employment
as such, or by any other person in a fiduciary
capacity, or for a willful violation of duty.’ (Sec.
1 [b], Rule 57), or ‘an action against a party who
has been guilty of fraud in contracting the debt
or incurring the obligation upon which the action
is brought’ (Sec. 1 [d], Rule 57), the defendant
is not allowed to file a motion to dissolve the
attachment under Section 13 of Rule 57 by
offering to show the falsity of the factual
averments in the plaintiffs application and
affidavits on which the writ was based — and
consequently that the writ based thereon had
been improperly or irregularly issued (SEE
Benitez v. I.A.C., 154 SCRA 41) — the reason
being that the hearing on such a motion for
dissolution of the writ would be tantamount to a
trial of the merits of the action. In other words,
the merits of the action would be ventilated at a
mere hearing of a motion, instead of at the
regular trial. Therefore, when the writ of
attachment is of this nature, the only way it can
be dissolved is by a counterbond (G.B. Inc. v.
Sanchez, 98 Phil. 886)."cralaw virtua1aw library
(b) Effect of the dissolution of a preliminary
attachment on the plaintiffs attachment
bond:jgc:chanrobles.com.ph
". . . The dissolution of the preliminary
attachment upon security given, or a showing of
its irregular or improper issuance, does not of
course operate to discharge the sureties on
plaintiffs own attachment bond. The reason is
simple. That bond is ‘executed to the adverse
party, . . . conditioned that the . . . (applicant)
will pay all the costs which may be adjudged to
the adverse party and all damages which he
may sustain by reason of the attachment, if the
court shall finally adjudge that the applicant was
not entitled thereto’ (SEC. 4, Rule 57). Hence,
until that determination is made, as to the
applicant’s entitlement to the attachment, his
bond must stand and cannot be withdrawn."
cralawnad
With respect to the other provisional remedies,
i.e., preliminary injunction (Rule 58),
receivership (Rule 59), replevin or delivery of
personal property (Rule 60), the rule is the
same: they may also issue ex parte. 29
It goes without saying that whatever be the acts
done by the Court prior to the acquisition of
jurisdiction over the person of the defendant, as
above indicated — issuance of summons, order
of attachment and writ of attachment (and/or
appointment of guardian ad litem, or grant of
authority to the plaintiff to prosecute the suit as
a pauper litigant, or amendment of the
complaint by the plaintiff as a matter of right
without leave of court 30 — and however valid
and proper they might otherwise be, these do
not and cannot bind and affect the defendant
until and unless jurisdiction over his person is
eventually obtained by the court, either by
service on him of summons or other coercive
process or his voluntary submission to the
court’s authority. Hence, when the sheriff or
other proper officer commences implementation
of the writ of attachment, it is essential that he
serve on the defendant not only a copy of the
applicant’s affidavit and attachment bond, and
of the order of attachment, as explicitly required
by Section 5 of Rule 57, but also the summons
addressed to said defendant as well as a copy of
the complaint and order for appointment of
guardian ad litem, if any, as also explicitly
directed by Section 3, Rule 14 of the Rules of
Court. Service of all such documents is
indispensable not only for the acquisition of
jurisdiction over the person of the defendant,
but also upon considerations of fairness, to
apprise the defendant of the complaint against
him, of the issuance of a writ of preliminary
attachment and the grounds therefor and thus
accord him the opportunity to prevent
attachment of his property by the posting of a
counterbond in an amount equal to the plaintiff’
claim in the complaint pursuant to Section 5 (or
Section 12), Rule 57, or dissolving it by causing
dismissal of the complaint itself on any of the
grounds set forth in Rule 16, or demonstrating
the insufficiency of the applicant’s affidavit or
bond in accordance with Section 13, Rule 57.
It was on account of the failure to comply with
this fundamental requirement of service of
summons and the other documents above
indicated that writs of attachment issued by the
Trial Court ex parte were struck down by this
Court’s Third Division in two (2) cases, namely:
Sievert v. Court of Appeals, 31 and BAC
Manufacturing and Sales Corporation v. Court of
Appeals, Et. Al. 32 In contrast to the case at bar
— where the summons and a copy of the
complaint, as well as the order and writ of
attachment and the attachment bond were
served on the defendant — in Sievert, levy on
attachment was attempted notwithstanding
that only the petition for issuance of the writ of
preliminary attachment was served on the
defendant, without any prior or accompanying
summons and copy of the complaint; and in BAC
Manufacturing and Sales Corporation, neither
the summons nor the order granting the
preliminary attachment or the writ of
attachment itself was served on the defendant
"before or at the time the levy was
made."cralaw virtua1aw library
For the guidance of all concerned, the Court
reiterates and reaffirms the proposition that
writs of attachment may properly issue ex parte
provided that the Court is satisfied that the
relevant requisites therefor have been fulfilled
by the applicant, although it may, in its
discretion, require prior hearing on the
application with notice to the defendant; but
that levy on property pursuant to the writ thus
issued may not be validly effected unless
preceded, or contemporaneously accompanied
by service on the defendant of summons, a copy
of the complaint (and of the appointment of
guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted
separately from the complaint), the order of
attachment, and the plaintiff’s attachment
bond.

WHEREFORE, the petition is GRANTED; the

challenged decision of the Court of Appeals is
hereby REVERSED, and the order and writ of
attachment issued by Hon. Milagros C. Nartatez,
Presiding Judge of Branch 8, Regional Trial
Court of Davao City in Civil Case No. 19513-89
against Queensland Hotel or Motel or
Queensland Tourist Inn and Teodorico Adarna
are hereby REINSTATED. Costs against private
respondents.

SO ORDERED.
[G.R. No. 102448. August 5, 1992.]
RICARDO CUARTERO, Petitioner, v. COURT
OF APPEALS, ROBERTO EVANGELISTA and
FELICIA EVANGELISTA, Respondents.
Abesamis, Medialdea & Abesamis for
Petitioner.
Eufrenio Law Offices for Private
Respondent.
SYLLABUS
1. REMEDIAL LAW; PROVISIONAL REMEDIES;
WRIT OF PRELIMINARY ATTACHMENT;
DEFINED. — A writ of preliminary attachment is
defined as a provisional remedy issued upon
order of the court where an action is pending to
be levied upon the property or properties of the
defendant therein, the same to be held
thereafter by the sheriff as security for the
satisfaction of whatever judgment might be
secured in said action by the attaching creditor
against the defendant (Adlawan v. Tomol, 184
SCRA 31 [1990] citing Virata v. Aquino, 53
SCRA 30-31 [1973]).
2. ID.; ID.; ID.; REQUISITES FOR THE
ISSUANCE THEREOF. — Under Section 3, Rule
57 of the Rules of Court, the only requisites for
the issuance of the writ are the affidavit and
bond of the applicant. As has been expressly
ruled in BF Homes, Inc. v. Court of Appeals, 190
SCRA 262 {1990), citing Mindanao Savings and
Loan Association, Inc. v. Court of Appeals, 172
SCRA 480 (1989), no notice to the adverse
party or hearing of the application is required
inasmuch as the time which the hearing will take
could be enough to enable the defendant to
abscond or dispose of his property before a writ
of attachment issues. In such a case, a hearing
would render nugatory the purpose of this
provisional remedy. The ruling remains good
law. There is, thus, no merit in the private
respondents’ claim of violation of their
constitutionally guaranteed right to due
process.
3. ID.; ID.; ID.; CAN BE APPLIED FOR AND
GRANTED AT THE COMMENCEMENT OF THE
ACTION OR AT ANY TIME. — The writ of
preliminary attachment can be applied for and
granted at the commencement of the action or
at any time thereafter (Section 1, Rule 57, Rules
of Court). In Davao Light and Power Co., Inc. v.
Court of Appeals, (G.R. No. 93262, November
29, 1991), the phrase "at the commencement
of the action" is interpreted as referring to the
date of the filing of the complaint which is a time
before summons is served on the defendant or
even before summons issues. The court added
that —." . . after an action is properly
commenced — by filing of the complaint and the
payment of all requisite docket and other fees
— the plaintiff may apply and obtain a writ of
preliminary attachment upon the fulfillment of
the pertinent requisites laid down by law, and
that he may do so at any time, either before or
after service of summons on the defendant. And
this, indeed, has been the immemorial practice
sanctioned by the courts: for the plaintiff or
other proper party to incorporate the application
for attachment in the complaint or other
appropriate pleading (counter-claim, cross-
claim, third-party-claim) and for the Trial Court
to issue the writ ex-parte at the commencement
of the action if it finds the application otherwise
sufficient in form and substance."cralaw
virtua1aw library
4. ID.; ID.; ID.; CANNOT BIND AND AFFECT
THE DEFENDANT UNTIL JURISDICTION OVER
HIS PERSON IS EVENTUALLY OBTAINED. — The
Court also pointed out that: ". . . It is incorrect
to theorize that after an action or proceeding
has been commenced and jurisdiction over the
person of the plaintiff has been vested in the
Court, but before acquisition of jurisdiction over
the person of the defendant (either by service
of summons or his voluntary submission to the
Court’s authority), nothing can be validly done
by the plaintiff or the Court. It is wrong to
assume that the validity of acts done during the
period should be dependent on, or held in
suspension until, the actual obtention of
jurisdiction over the defendant’s person. The
obtention by the court of jurisdiction over the
person of the defendant is one thing; quite
another is the acquisition of jurisdiction over the
person of the plaintiff or over the subject matter
or nature of the action, or the res or object
thereof." It is clear from our pronouncements
that a writ of preliminary attachment may issue
even before summons is served upon the
defendant. However, we have likewise ruled
that the writ cannot bind and affect the
defendant until jurisdiction over his person is
eventually obtained. Therefore, it is required
that when the proper officer commences
implementation of the writ of attachment,
service of summons should be simultaneously
made.
5. ID.; ID.; ID.; STAGES IN GRANTING
THEREOF. — It must be emphasized that the
grant of the provisional remedy of attachment
practically involves three stages: first, the court
issues the order granting the application;
second, the writ of attachment issues pursuant
to the order granting the writ; and third, the writ
is implemented. For the initial two stages, it is
not necessary that jurisdiction over the person
of the defendant should first be obtained.
However, once the implementation commences,
it is required that the court must have acquired
jurisdiction over the defendant for without such
jurisdiction, the court has no power and
authority to act in any manner against the
defendant. Any order issuing from the Court will
not bind the defendant.
6. ID.; ID.; ID.; MAY BE ISSUED EX PARTE
PROVIDED SUMMONS AND COPY OF THE
COMPLAINT WERE SIMULTANEOUSLY SERVED.
— In Sievert v. Court of Appeals, 168 SCRA 692
(1988), cited by the Court Of Appeals in its
questioned decision, the writ of attachment
issued ex-parte was struck down because when
the writ of attachment was being implemented,
no jurisdiction over the person of the defendant
had as yet been obtained. The court had failed
to serve the summons to the defendant. The
circumstances in Sievert are different from
those in the case at bar. When the writ of
attachment was served on the spouses
Evangelista, the summons and copy of the
complaint were also simultaneously served. It is
appropriate to reiterate this Court’s exposition
in the Davao Light and Power case cited earlier,
to wit: ". . . writs of attachment may properly
issue ex-parte provided that the Court is
satisfied that the relevant requisites therefore
have been fulfilled by the applicant, although it
may, in its discretion, require prior hearing on
the application with notice to the defendant, but
that levy on property pursuant to the writ thus
issued may not be validly effected unless
preceded, or contemporaneously accompanied
by service on the defendant of summons, a copy
of the complaint (and of the appointment of
guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted
separately from the complaint), the order of
attachment, and the plaintiff’s attachment
bond."cralaw virtua1aw library
7. ID.; ID.; ID.; QUESTION AS TO WHETHER A
PROPER GROUND EXISTED FOR THE ISSUANCE
THEREOF; MUST BE DETERMINED IN AN
APPROPRIATE PROCEEDING. — The question as
to whether a proper ground existed for the
issuance of the writ is a question of fact the
determination of which can only be had in
appropriate proceedings conducted for the
purpose (Peroxide Philippines Corporation v.
Court of Appeals, 199 SCRA 882 [1991]). It
must be noted that the spouses Evangelista’s
motion to discharge the writ of preliminary
attachment was denied by the lower court for
lack of merit. There is no showing that there was
an abuse of discretion on the part of the lower
court in denying the motion. Moreover, an
attachment may not be dissolved by a showing
of its irregular or improper issuance if it is upon
a ground which is at the same time the
applicant’s cause of action in the main case
since an anomalous situation would result if the
issues of the main case would be ventilated and
resolved in a mere hearing of a motion (Davao
Light and Power Co., Inc. v. Court of Appeals,
supra, The Consolidated Bank and Trust Corp.
(Solidbank) v. Court of Appeals, 197 SCRA 663
[1991]).
DECISION
GUTIERREZ, JR., J.:
This is a petition for review on certiorari seeking
to annul the decision of the Court of Appeals
promulgated on June 27, 1991 as well as the
subsequent resolution dated October 22, 1991
denying the motion for reconsideration in CA-
G.R. SP No. 23199 entitled "Spouses Roberto
and Felicia Evangelista v. Honorable Cesar C.
Peralejo, Presiding Judge Regional Trial Court of
Quezon City, Branch 98, and Ricardo Cuartero,"
which nullified the orders of the trial court dated
August 24, 1990 and October 4, 1990 and
cancelled the writ of preliminary attachment
issued on September 19, 1990.
Following are the series of events giving rise to
the present controversy.
On August 20, 1990, petitioner Ricardo Cuartero
filed a complaint before the Regional Trial Court
of Quezon City against the private respondents,
Evangelista spouses, for a sum of money plus
damages with a prayer for the issuance of a writ
of preliminary attachment. The complaint was
docketed as Civil Case No. Q-90-6471.
On August 24, 1990, the lower court issued an
order granting ex-parte the petitioner’s prayer
for the issuance of a writ of preliminary
attachment.
On September 19, 1990, the writ of preliminary
attachment was issued pursuant to the trial
court’s order dated August 24, 1990. On the
same day, the summons for the spouses
Evangelista was likewise prepared.
The following day, that is, on September 20,
1990, a copy of the writ of preliminary
attachment, the order dated August 24, 1990,
the summons and the complaint were all
simultaneously served upon the private
respondents at their residence. Immediately
thereafter, Deputy Sheriff Ernesto L. Sula
levied, attached and pulled out the properties in
compliance with the court’s directive to attach
all the properties of private respondents not
exempt from execution, or so much thereof as
may be sufficient to satisfy the petitioner’s
principal claim in the amount of P2,171,794.91.
Subsequently, the spouses Evangelista filed a
motion to set aside the order dated August 24,
1990 and discharge the writ of preliminary
attachment for having been, irregularly and
improperly issued. On October 4, 1990, the
lower court denied the motion for lack of
merit.cralawnad
Private respondents, then, filed a special civil
action for certiorari with the Court of Appeals
questioning the orders of the lower court dated
August 24, 1990 and October 4, 1990 with a
prayer for a restraining order or writ of
preliminary injunction to enjoin the judge from
taking further proceedings below.
In a Resolution dated October 31, 1990, the
Court of Appeals resolved not to grant the
prayer for restraining order or writ of
preliminary injunction, there being no clear
showing that the spouses Evangelista were
entitled thereto.
On June 27, 1991, the Court of Appeals granted
the petition for certiorari and rendered the
questioned decision. The motion for
reconsideration filed by herein petitioner
Cuartero was denied for lack of merit in a
resolution dated October 22, 1991. Hence, the
present recourse to this Court.
The petitioner raises the following assignment
of errors:chanrob1es virtual 1aw library
I and for purposes of the ancillary remedy of
THE COURT OF APPEALS ERRED AND
COMMITTED A GRAVE ABUSE OF DISCRETION,
AMOUNTING TO LACK OF JURISDICTION WHEN
IT HELD THAT THE REGIONAL TRIAL COURT
DID NOT ACQUIRE JURISDICTION OVER
RESPONDENT SPOUSES.
II
THE COURT OF APPEALS ERRED AND ACTED
WITH GRAVE ABUSE OF DISCRETION WHEN IT
HELD THAT THE REGIONAL TRIAL COURT
COULD NOT VALIDLY ISSUE THE SUBJECT WRIT
OF PRELIMINARY ATTACHMENT WHICH IS AN
ANCILLARY REMEDY. (Rollo, p. 13)
The Court of Appeals’ decision is grounded on
its finding that the trial court did not acquire any
jurisdiction over the person of the defendants
(private respondents herein). It declared
that:jgc:chanrobles.com.ph
". . . the want of jurisdiction of the trial court to
proceed in the main case as well as the ancillary
remedy of attachment is quite clear. It is not
disputed that neither service of summons with
a copy of the complaint nor voluntary
appearance of petitioners was had in this case
before the trial court issued the assailed order
dated August 24, 1990, as well as the writ of
preliminary attachment dated September 19,
1990. This is reversible error and must be
corrected on certiorari." (Rollo, p. 24).
The appellate tribunal relied on the case of
Sievert v. Court of Appeals, 168 SCRA 692
(1988) in arriving at the foregoing conclusion.
It stated that:chanroblesvirtualawlibrary
"Valid service of summons and a copy of the
complaint vest jurisdiction in the court over the
defendant both for the purpose of the main case
attachment and a court which has not acquired
jurisdiction over the person of defendant,
cannot bind the defendant whether in the main
case or in any ancillary proceeding such as
attachment proceedings (Sievert v. Court of
Appeals, 168 SCRA 692)." (Rollo, p. 24)
The private respondents, in their comment,
adopted and reiterated the aforementioned
ruling of the Court of Appeals. They added that
aside from the want of jurisdiction, no proper
ground also existed for the issuance of the writ
of preliminary attachment. They stress that the
fraud in contracting the debt or incurring the
obligation upon which the action is brought
which comprises a ground for attachment must
have already been intended at the inception of
the contract. According to them, there was no
intent to defraud the petitioner when the
postdated checks were issued inasmuch as the
latter was aware that the same were not yet
funded and that they were issued only for
purposes of creating an evidence to prove a pre-
existing obligation.
Another point which the private respondents
raised in their comment is the alleged violation
of their constitutionally guaranteed right to due
process when the writ was issued without notice
and hearing.
In the later case of Davao Light and Power Co.,
Inc. v. Court of Appeals, G.R. No. 93262,
November 29, 1991, we had occasion to deal
with certain misconceptions which may have
arisen from our Sievert ruling. The question
which was resolved in the Davao Light case is
whether or not a writ of preliminary attachment
may issue ex-parte against a defendant before
the court acquires jurisdiction over the latter’s
person by service of summons or his voluntary
submission to the court’s authority. The Court
answered in the affirmative. This should have
clarified the matter but apparently another
ruling is necessary.
A writ of preliminary attachment is defined as a
provisional remedy issued upon order of the
court where an action is pending to be levied
upon the property or properties of the
defendant therein, the same to be held
thereafter by the sheriff as security for the
satisfaction of whatever judgment might be
secured in said action by the attaching creditor
against the defendant (Adlawan v. Tomol, 184
SCRA 31 [1990] citing Virata v. Aquino, 53
SCRA 30-31 [1973]).
Under section 3, Rule 57 of the Rules of Court,
the only requisites for the issuance of the writ
are the affidavit and bond of the applicant. As
has been expressly ruled in BF Homes, Inc. v.
Court of Appeals, 190 SCRA 262 (1990), citing
Mindanao Savings and Loan Association, Inc. v.
Court of Appeals, 172 SCRA 480 (1989), no
notice to the adverse party or hearing of the
application is required inasmuch as the time
which the hearing will take could be enough to
enable the defendant to abscond or dispose of
his property before a writ of attachment issues.
In such a case, a hearing would render nugatory
the purpose of this provisional remedy. The
ruling remains good law. There is, thus, no merit
in the private respondents’ claim of violation of
their constitutionally guaranteed right to due
process.chanrobles lawlibrary : rednad
The writ of preliminary attachment can be
applied for and granted at the commencement
of the action or at any time thereafter (Section
1, Rule 57, Rules of Court). In Davao Light and
Power, Co. Inc. v. Court of Appeals, supra, the
phrase "at the commencement of the action" is
interpreted as referring to the date of the filing
of the complaint which is a time before
summons is served on the defendant or even
before summons issues. The Court added that
— However, we have likewise ruled that the writ
". . . after an action is properly commenced —
by filing of the complaint and the payment of all
requisite docket and other fees — the plaintiff
may apply and obtain a writ of preliminary
attachment upon the fulfillment of the pertinent
requisites laid down by law, and that he may do
so at any time, either before or after service of
summons on the defendant. And this, indeed,
has been the immemorial practice sanctioned by
the courts: for the plaintiff or other proper party
to incorporate the application for attachment in
the complaint or other appropriate pleading
(counter-claim, crossclaim, third-party-claim)
and for the Trial Court to issue the writ ex-parte
at the commencement of the action if it finds
the application otherwise sufficient in form and
substance."cralaw virtua1aw library
The Court also pointed out
that:jgc:chanrobles.com.ph
". . . It is incorrect to theorize that after an
action or proceeding has been commenced and
jurisdiction over the person of the plaintiff has
been vested in the Court, but before acquisition
of jurisdiction over the person of the defendant
(either by service of summons or his voluntary
submission to the Court’s authority), nothing
can be validly done by the plaintiff or the Court.
It is wrong to assume that the validity of acts
done during the period should be dependent on,
to held in suspension until, the actual obtention
of jurisdiction over the defendant’s person. The
obtention by the court of jurisdiction over the
person of the defendant is one thing; quite
another is the acquisition of jurisdiction over the
person of the plaintiff or over the subject matter
or nature of the action, or the res or object
thereof."cralaw virtua1aw library
It is clear from our pronouncements that a writ
of preliminary attachment may issue even
before summons is served upon the defendant.
cannot bind and affect the defendant until
jurisdiction over his person is eventually
obtained. Therefore, it is required that when the
proper officer commences implementation of
the writ of attachment, service of summons
should be simultaneously made.
It must be emphasized that the grant of the
provisional remedy of attachment practically
involves three stages: first, the court issues the
order granting the application; second, the writ
of attachment issues pursuant to the order
granting the writ; and third, the writ is
implemented. For the initial two stages, it is not
necessary that jurisdiction over the person of
the defendant should first be obtained.
However, once the implementation commences,
it is required that the court must have acquired
jurisdiction over the defendant for without such
jurisdiction, the court has no power and
authority to act in any manner against the
defendant. Any order issuing from the Court will
not bind the defendant.
In Sievert v. Court of Appeals, supra, cited by
the Court of Appeals in its questioned decision,
the writ of attachment issued ex-parte was
struck down because when the writ of
attachment was being implemented, no
jurisdiction over the person of the defendant
had as yet been obtained. The court had failed
to serve the summons to the
defendant.chanrobles.com : virtual law library
The circumstances in Sievert are different from
those in the case at bar. When the writ of
attachment was served on the spouses
Evangelista, the summons and copy of the
complaint were also simultaneously served.
It is appropriate to reiterate this Court’s
exposition in the Davao Light and Power case
cited earlier, to wit:jgc:chanrobles.com.ph
". . . writs of attachment may properly issue ex-
parte provided that the Court is satisfied that
the relevant requisites therefore have been
fulfilled by the applicant, although it may, in its
discretion, require prior hearing on the
application with notice to the defendant, but
that levy on property pursuant to the writ thus
issued may not be validly effected unless
preceded, or contemporaneously accompanied
by service on the defendant of summons, a copy
of the complaint (and of the appointment of
guardian ad litem, if any), the application for
attachment (if not incorporated in but submitted
separately from the complaint), the order of
attachment, and the plaintiff’s attachment
bond."cralaw virtua1aw library
The question as to whether a proper ground
existed for the issuance of the writ is a question
of fact the determination of which can only be
had in appropriate proceedings conducted for
the purpose (Peroxide Philippines Corporation v.
Court of Appeals, 199 SCRA 882 [1991]). It
must be noted that the spouses Evangelista’s
motion to discharge the writ of preliminary
attachment was denied by the lower court for
lack of merit. There is no showing that there was
an abuse of discretion on the part of the lower
court in denying the motion.
Moreover, an attachment may not be dissolved
by a showing of its irregular or improper
issuance if it is upon a ground which is at the
same time the applicant’s cause of action in the
main case since an anomalous situation would
result if the issues of the main case would be
ventilated and resolved in a mere hearing of a
motion (Davao Light and Power Co., Inc. v.
Court of Appeals, supra, The Consolidated Bank
and Trust Corp. (Solidbank) v. Court of Appeals,
197 SCRA 663 [1991]).

In the present case, one of the allegations in

petitioner’s complaint below is that the
defendant spouses induced the plaintiff to grant
the loan by issuing postdated checks to cover
the installment payments and a separate set of
postdated checks for payment of the stipulated
interest (Annex "B"). The issue of fraud, then ,
is clearly within the competence of the lower
court in the main action.

WHEREFORE, premises considered, the Court

hereby GRANTS the petition. The challenged
decision of the Court of Appeals is REVERSED,
and the order and writ of attachment issued by
Hon. Cesar C. Peralejo, Presiding Judge of
Branch 98, Regional Trial Court of Quezon City
against spouses Evangelista are hereby
REINSTATED. No pronouncement as to
costs.chanrobles lawlibrary : rednad

SO ORDERED.
[G.R. NO. 124642. February 23, 2004]
ALFREDO CHING and ENCARNACION
CHING, Petitioners, v. THE HON. COURT OF
APPEALS and ALLIED BANKING
CORPORATION, Respondents.
DECISION
CALLEJO, SR., J.:
This Petition for Review , under Rule 45 of the
Revised Rules of Court, assails the Decision1 of
the Court of Appeals (CA) dated November 27,
1995 in CA-G.R. SP No. 33585, as well as the
Resolution2 on April 2, 1996 denying the
petitioners motion for reconsideration. The
impugned decision granted the private
respondents Petition for Certiorari and set aside
the Orders of the trial court dated December 15,
19933 and February 17, 19944 nullifying the
attachment of 100,000 shares of stocks of the
Citycorp Investment Philippines under the name
of petitioner Alfredo Ching.
The following facts are
undisputed:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
On September 26, 1978, the Philippine
Blooming Mills Company, Inc. (PBMCI) obtained
a loan of P9,000,000.00 from the Allied Banking
Corporation (ABC). By virtue of this loan, the
PBMCI, through its Executive Vice-President
Alfredo Ching, executed a promissory note for
the said amount promising to pay on December
22, 1978 at an interest rate of 14% per annum.5
As added security for the said loan, on
September 28, 1978, Alfredo Ching, together
with Emilio Taedo and Chung Kiat Hua, executed
a continuing guaranty with the ABC binding
themselves to jointly and severally guarantee
the payment of all the PBMCI obligations owing
the ABC to the extent of P38,000,000.00.6 The
loan was subsequently renewed on various
dates, the last renewal having been made on
December 4, 1980.7 ςrνll
Earlier, on December 28, 1979, the ABC
extended another loan to the PBMCI in the
amount of P13,000,000.00 payable in eighteen
months at 16% interest per annum. As in the
previous loan, the PBMCI, through Alfredo
Ching, executed a promissory note to evidence
the loan maturing on June 29, 1981.8 This was
renewed once for a period of one month.9 ςrνll
The PBMCI defaulted in the payment of all its
loans. Hence, on August 21, 1981, the ABC filed
a complaint for sum of money with prayer for a
writof preliminary attachment against the
PBMCI to collect the P12,612,972.88 exclusive
of interests, penalties and other bank charges.
Impleaded as co-defendants in the complaint
were Alfredo Ching, Emilio Taedo and Chung
Kiat Hua in their capacity as sureties of the
PBMCI.
The case was docketed as Civil Case No. 142729
in the Regional Trial Court of Manila, Branch
XVIII.10 In its application for a writ of
preliminary attachment, the ABC averred that
the defendants are guilty of fraud in incurring
the obligations upon which the present action is
brought11 in that they falsely represented
themselves to be in a financial position to pay
their obligation upon maturity thereof.12 Its
supporting affidavit stated, inter alia, that the
[d]efendants have removed or disposed of their
properties, or [are] ABOUT to do so, with intent
to defraud their creditors.13 ςrνll
On August 26, 1981, after an ex-parte hearing,
the trial court issued an Order denying the ABCs
application for a writ of preliminary attachment.
The trial court decreed that the grounds alleged
in the application and that of its supporting
affidavit are all conclusions of fact and of law
which do not warrant the issuance of the writ
prayed for.14 On motion for reconsideration,
however, the trial court, in an Order dated
September 14, 1981, reconsidered its previous
order and granted the ABCs application for a
writ of preliminary attachment on a bond of
P12,700,000. The order, in relevant part,
stated:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
With respect to the second ground relied upon
for the grant of the writ of preliminary
attachment ex-parte, which is the alleged
disposal of properties by the defendants with
intent to defraud creditors as provided in Sec.
1(e) of Rule 57 of the Rules of Court, the
affidavits can only barely justify the issuance of
said writ as against the defendant Alfredo Ching
who has allegedly bound himself jointly and
severally to pay plaintiff the defendant
corporations obligation to the plaintiff as a
surety thereof.
WHEREFORE, let a writ of preliminary
attachment issue as against the defendant
Alfredo Ching requiring the sheriff of this Court
to attach all the properties of said Alfredo Ching
not exceeding P12,612,972.82 in value, which
are within the jurisdiction of this Court and not
exempt from execution upon, the filing by
plaintiff of a bond duly approved by this Court
in the sum of Twelve Million Seven Hundred
Thousand Pesos (P12,700,000.00) executed in
favor of the defendant Alfredo Ching to secure
the payment by plaintiff to him of all the costs
which may be adjudged in his favor and all
damages he may sustain by reason of the
attachment if the court shall finally adjudge that
the plaintiff was not entitled thereto.
SO ORDERED.15 ςrνll
Upon the ABCs posting of the requisite bond, the
trial court issued a writ of preliminary
attachment. Subsequently, summonses were
served on the defendants,16 save Chung Kiat
Hua who could not be found.
Meanwhile, on April 1, 1982, the PBMCI and
Alfredo Ching jointly filed a petition for
suspension of payments with the Securities and
Exchange Commission (SEC), docketed as SEC
Case No. 2250, at the same time seeking the
PBMCIs rehabilitation.17 ςrνll
On July 9, 1982, the SEC issued an Order
placing the PBMCIs business, including its
assets and liabilities, under rehabilitation
receivership, and ordered that all actions for
claims listed in Schedule A of the petition
pending before any court or tribunal are hereby
suspended in whatever stage the same may be
until further orders from the Commission.18 The
ABC was among the PBMCIs creditors named in
the said schedule.
Subsequently, on January 31, 1983, the PBMCI
and Alfredo Ching jointly filed a Motion to
Dismiss and/or motion to suspend the
proceedings in Civil Case No. 142729 invoking
the PBMCIs pending application for suspension
of payments (which Ching co-signed) and over
which the SEC had already assumed
jurisdiction.19 On February 4, 1983, the ABC
filed its Opposition thereto.20 ςrνll
In the meantime, on July 26, 1983, the deputy
sheriff of the trial court levied on attachment the
100,000 common shares of Citycorp stocks in
the name of Alfredo Ching.21 ςrνll
Thereafter, in an Order dated September 16,
1983, the trial court partially granted the
aforementioned motion by suspending the
proceedings only with respect to the PBMCI. It
denied Chings motion to dismiss the
complaint/or suspend the proceedings and
pointed out that P.D. No. 1758 only concerns
the activities of corporations, partnerships and
associations and was never intended to regulate
and/or control activities of individuals.Thus, it
directed the individual defendants to file their
answers.22 ςrνll
Instead of filing an answer, Ching filed on
January 14, 1984 a Motion to Suspend
Proceedings on the same ground of the
pendency of SEC Case No. 2250. This motion
met the opposition from the ABC.23 ςrνll
On January 20, 1984, Taedo filed his Answer
with counterclaim and cross-claim.24 Ching
eventually filed his Answer on July 12, 1984.25
ςrνll
On October 25, 1984, long after submitting their
answers, Ching filed an Omnibus Motion,26
again praying for the dismissal of the complaint
or suspension of the proceedings on the ground
of the July 9, 1982 Injunctive Order issued in
SEC Case No. 2250. He averred that as a surety
of the PBMCI, he must also necessarily benefit
from the defenses of his principal. The ABC
opposed Chings omnibus motion.
Emilio Y. Taedo, thereafter, filed his own
Omnibus Motion27 praying for the dismissal of
the complaint, arguing that the ABC had
abandoned and waived its right to proceed
against the continuing guaranty by its act of
resorting to preliminary attachment.
On December 17, 1986, the ABC filed a Motion
to Reduce the amount of his preliminary
attachment bond from P12,700,000 to
P6,350,000.28 Alfredo Ching opposed the
motion,29 but on April 2, 1987, the court issued
an Order setting the incident for further hearing
on May 28, 1987 at 8:30 a.m. for the parties to
adduce evidence on the actual value of the
properties of Alfredo Ching levied on by the
sheriff.30 ςrνll
On March 2, 1988, the trial court issued an
Order granting the motion of the ABC and
rendered the attachment bond of P6,350,000.31
ςrνll
On November 16, 1993, Encarnacion T. Ching,
assisted by her husband Alfredo Ching, filed a
Motion to Set Aside the levy on attachment. She
alleged inter alia that the 100,000 shares of
stocks levied on by the sheriff were acquired by
her and her husband during their marriage out
of conjugal funds after the Citycorp Investment
Philippines was established in 1974.
Furthermore, the indebtedness covered by the
continuing guaranty/comprehensive suretyship
contract executed by petitioner Alfredo Ching
for the account of PBMCI did not redound to the
benefit of the conjugal partnership. She,
likewise, alleged that being the wife of Alfredo
Ching, she was a third-party claimant entitled to
file a motion for the release of the properties.32
She attached therewith a copy of her marriage
contract with Alfredo Ching.33 ςrνll
The ABC filed a comment on the motion to
quash preliminary attachment and/or motion to
expunge records, contending
that:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
2.1The supposed movant, Encarnacion T. Ching,
is not a party to this present case; thus, she has
no personality to file any motion before this
Honorable Court;chanroblesvirtuallawlibrary
2.2Said supposed movant did not file any
Motion for Intervention pursuant to Section 2,
Rule 12 of the Rules of
Court;chanroblesvirtuallawlibrary
2.3Said Motion cannot even be construed to be
in the nature of a Third-Party Claim conformably
with Sec. 14, Rule 57 of the Rules of Court.
3.Furthermore, assuming in gracia argumenti
that the supposed movant has the required
personality, her Motion cannot be acted upon by
this Honorable Court as the above-entitled case
is still in the archives and the proceedings
thereon still remains suspended. And there is no
previous Motion to revive the same.34 ςrνll
The ABC also alleged that the motion was barred
by prescription or by laches because the shares
of stocks were in custodia legis.
During the hearing of the motion, Encarnacion
T. Ching adduced in evidence her marriage
contract to Alfredo Ching to prove that they
were married on January 8, 1960;35 the articles
of incorporation of Citycorp Investment
Philippines dated May 14, 1979;36 and, the
General Information Sheet of the corporation
showing that petitioner Alfredo Ching was a
member of the Board of Directors of the said
corporation and was one of its top twenty
stockholders.
On December 10, 1993, the Spouses Ching filed
their Reply/Opposition to the motion to expunge
records.
Acting on the aforementioned motion, the trial
court issued on December 15, 1993 an Order37
lifting the writ of preliminary attachment on the
shares of stocks and ordering the sheriff to
return the said stocks to the petitioners. The
dispositive portion reads:
WHEREFORE, the instant Motion to Quash
Preliminary Attachment, dated November 9,
1993, is hereby granted. Let the writ of
preliminary attachment subject matter of said
motion, be quashed and lifted with respect to
the attached 100,000 common shares of stock
of Citycorp Investment Philippines in the name
of the defendant Alfredo Ching, the said shares
of stock to be returned to him and his movant-
spouse by Deputy Sheriff Apolonio A. Golfo who
effected the levy thereon on July 26, 1983, or
by whoever may be presently in possession
thereof.
SO ORDERED.38
The plaintiff Allied Banking Corporation filed a
motion for the reconsideration of the order but
denied the same on February 17, 1994. The
petitioner bank forthwith filed a petition for
certiorari with the CA, docketed as CA-G.R. SP
No. 33585, for the nullification of the said order
of the court, contending that:
1.The respondent Judge exceeded his authority
thereby acted without jurisdiction in taking
cognizance of, and granting a Motion filed by a
complete stranger to the case.
2.The respondent Judge committed a grave
abuse of discretion in lifting the writ of
preliminary attachment without any basis in fact
and in law, and contrary to established
jurisprudence on the matter.39
On November 27, 1995, the CA rendered
judgment granting the petition and setting aside
the assailed orders of the trial court, thus:
WHEREFORE, premises considered, the petition
is GRANTED, hereby setting aside the
questioned orders (dated December 15, 1993
and February 17, 1994) for being null and void.
SO ORDERED.40
The CA sustained the contention of the private
respondent and set aside the assailed orders.
According to the CA, the RTC deprived the
private respondent of its right to file a bond
under Section 14, Rule 57 of the Rules of
Court.The petitioner Encarnacion T. Ching was
not a party in the trial court; hence, she had no
right of action to have the levy annulled with a
motion for that purpose. Her remedy in such
case was to file a separate action against the
private respondent to nullify the levy on the
100,000 Citycorp shares of stocks. The court
stated that even assuming that Encarnacion T.
Ching had the right to file the said motion, the
same was barred by laches.
Citing Wong v. Intermediate Appellate Court,41
the CA ruled that the presumption in Article 160
of the New Civil Code shall not apply where, as
in this case, the petitioner-spouses failed to
prove the source of the money used to acquire
the shares of stock. It held that the levied
shares of stocks belonged to Alfredo Ching, as
evidenced by the fact that the said shares were
registered in the corporate books of Citycorp
solely under his name. Thus, according to the
appellate court, the RTC committed a grave
abuse of its discretion amounting to excess or
lack of jurisdiction in issuing the assailed orders.
The petitioners motion for reconsideration was
denied by the CA in a Resolution dated April 2,
1996.
The petitioner-spouses filed the instant Petition
for Review on Certiorari , asserting that the RTC
did not commit any grave abuse of discretion
amounting to excess or lack of jurisdiction in
issuing the assailed orders in their favor; hence,
the CA erred in reversing the same. They aver
that the source of funds in the acquisition of the
levied shares of stocks is not the controlling
factor when invoking the presumption of the
conjugal nature of stocks under Art. 160,42 and
that such presumption subsists even if the
property is registered only in the name of one
of the spouses, in this case, petitioner Alfredo
Ching.43 According to the Petitioners, the
suretyship obligation was not contracted in the
pursuit of the petitioner-husbands profession or
business.44 And, contrary to the ruling of the CA,
where conjugal assets are attached in a
collection suit on an obligation contracted by the
husband, the wife should exhaust her motion to
quash in the main case and not file a separate
suit.45 Furthermore, the petitioners contend that
under Art. 125 of the Family Code, the
petitioner-husbands gratuitous suretyship is
null and void ab initio,46 and that the share of
one of the spouses in the conjugal partnership
remains inchoate until the dissolution and
liquidation of the partnership.47 ςrνll
In its comment on the petition, the private
respondent asserts that the CA correctly
granted its petition for certiorari nullifying the
assailed order. It contends that the CA correctly
relied on the ruling of this Court in Wong v.
Intermediate Appellate Court.Citing Cobb-Perez
v. Lantin and G-Tractors, Inc. v. Court of
Appeals, the private respondent alleges that the
continuing guaranty and suretyship executed by
petitioner Alfredo Ching in pursuit of his
profession or business. Furthermore, according
to the private respondent, the right of the
petitioner-wife to a share in the conjugal
partnership property is merely inchoate before
the dissolution of the partnership; as such, she
had no right to file the said motion to quash the
levy on attachment of the shares of stocks.
The issues for resolution are as follows: (a)
whether the petitioner-wife has the right to file
the motion to quash the levy on attachment on
the 100,000 shares of stocks in the Citycorp
Investment Philippines; (b) whether or not the
RTC committed a grave abuse of its discretion
amounting to excess or lack of jurisdiction in
issuing the assailed orders.
On the first issue, we agree with the petitioners
that the petitioner-wife had the right to file the
said motion, although she was not a party in
Civil Case No. 142729.48 ςrνll
In Ong v. Tating,49 we held that the sheriff may
attach only those properties of the defendant
against whom a writ of attachment has been
issued by the court. When the sheriff
erroneously levies on attachment and seizes the
property of a third person in which the said
defendant holds no right or interest, the
superior authority of the court which has
authorized the execution may be invoked by the
aggrieved third person in the same case. Upon
application of the third person, the court shall
order a summary hearing for the purpose of
determining whether the sheriff has acted
rightly or wrongly in the performance of his
duties in the execution of the writ of
attachment, more specifically if he has indeed
levied on attachment and taken hold of property
not belonging to the plaintiff. If so, the court
may then order the sheriff to release the
property from the erroneous levy and to return
the same to the third person. In resolving the
motion of the third party, the court does not and
cannot pass upon the question of the title to the
property with any character of finality. It can
treat the matter only insofar as may be
necessary to decide if the sheriff has acted
correctly or not. If the claimants proof does not
persuade the court of the validity of the title, or
right of possession thereto, the claim will be
denied by the court.The aggrieved third party
may also avail himself of the remedy of terceria
by executing an affidavit of his title or right of
possession over the property levied on
attachment and serving the same to the office
making the levy and the adverse party. Such
party may also file an action to nullify the levy
with damages resulting from the unlawful levy
and seizure, which should be a totally separate
and distinct action from the former case. The
above-mentioned remedies are cumulative and
any one of them may be resorted to by one
third-party claimant without availing of the
other remedies.50 ςrνll
In this case, the petitioner-wife filed her motion
to set aside the levy on attachment of the
100,000 shares of stocks in the name of
petitioner-husband claiming that the said shares
of stocks were conjugal in nature; hence, not
liable for the account of her husband under his
continuing guaranty and suretyship agreement
with the PBMCI.The petitioner-wife had the right
to file the motion for said relief.
On the second issue, we find and so hold that
the CA erred in setting aside and reversing the
orders of the RTC.The private respondent, the
petitioner in the CA, was burdened to prove that
the RTC committed a grave abuse of its
discretion amounting to excess or lack of
jurisdiction. The tribunal acts without
jurisdiction if it does not have the legal purpose
to determine the case; there is excess of
jurisdiction where the tribunal, being clothed
with the power to determine the case, oversteps
its authority as determined by law. There is
grave abuse of discretion where the tribunal
acts in a capricious, whimsical, arbitrary or
despotic manner in the exercise of its judgment
and is equivalent to lack of jurisdiction.51 ςrνll
It was incumbent upon the private respondent
to adduce a sufficiently strong demonstration
that the RTC acted whimsically in total disregard
of evidence material to, and even decide of, the
controversy before certiorari will lie. A special
civil action for certiorari is a remedy designed
for the correction of errors of jurisdiction and
not errors of judgment. When a court exercises
its jurisdiction, an error committed while so
engaged does not deprive it of its jurisdiction
being exercised when the error is committed.52
ςrνll
After a comprehensive review of the records of
the RTC and of the CA, we find and so hold that
the RTC did not commit any grave abuse of its
discretion amounting to excess or lack of
jurisdiction in issuing the assailed orders.
Article 160 of the New Civil Code provides that
all the properties acquired during the marriage
are presumed to belong to the conjugal
partnership, unless it be proved that it pertains
exclusively to the husband, or to the wife. In
Tan v. Court of Appeals ,53 we held that it is not
even necessary to prove that the properties
were acquired with funds of the partnership. As
long as the properties were acquired by the
parties during the marriage, they are presumed
to be conjugal in nature.In fact, even when the
manner in which the properties were acquired
does not appear, the presumption will still
apply, and the properties will still be considered
conjugal. The presumption of the conjugal
nature of the properties acquired during the
marriage subsists in the absence of clear,
satisfactory and convincing evidence to
overcome the same.54 ςrνll
In this case, the evidence adduced by the
petitioners in the RTC is that the 100,000 shares
of stocks in the Citycorp Investment Philippines
were issued to and registered in its corporate
books in the name of the petitioner-husband
when the said corporation was incorporated on
May 14, 1979. This was done during the
subsistence of the marriage of the petitioner-
spouses. The shares of stocks are, thus,
presumed to be the conjugal partnership
property of the petitioners. The private
respondent failed to adduce evidence that the
petitioner-husband acquired the stocks with his
exclusive money.55 The barefaced fact that the
shares of stocks were registered in the
corporate books of Citycorp Investment
Philippines solely in the name of the petitioner-
husband does not constitute proof that the
petitioner-husband, not the conjugal
partnership, owned the same.56 The private
respondents reliance on the rulings of this Court
in Maramba v. Lozano57 and Associated
Insurance & Surety Co., Inc. v. Banzon58 is
misplaced. In the Maramba case, we held that
where there is no showing as to when the
property was acquired, the fact that the title is
in the wifes name alone is determinative of the
ownership of the property. The principle was
reiterated in the Associated Insurance case
where the uncontroverted evidence showed that
the shares of stocks were acquired during the
marriage of the petitioners.
Instead of fortifying the contention of the
respondents, the ruling of this Court in Wong v.
Intermediate Appellate Court59 buttresses the
case for the petitioners. In that case, we ruled
that he who claims that property acquired by
the spouses during their marriage is not
conjugal partnership property but belongs to
one of them as his personal property is
burdened to prove the source of the money
utilized to purchase the same. In this case, the
private respondent claimed that the petitioner-
husband acquired the shares of stocks from the
Citycorp Investment Philippines in his own name
as the owner thereof. It was, thus, the burden
of the private respondent to prove that the
source of the money utilized in the acquisition
of the shares of stocks was that of the
petitioner-husband alone. As held by the trial
court, the private respondent failed to adduce
evidence to prove this assertion.
The CA, likewise, erred in holding that by
executing a continuing guaranty and suretyship
agreement with the private respondent for the
payment of the PBMCI loans, the petitioner-
husband was in the exercise of his profession,
pursuing a legitimate business. The appellate
court erred in concluding that the conjugal
partnership is liable for the said account of
PBMCI under Article 161(1) of the New Civil
Code.
Article 161(1) of the New Civil Code (now Article
121[2 and 3]60 of the Family Code of the
Philippines)
provides:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
Art. 161.The conjugal partnership shall be liable
for:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
(1) All debts and obligations contracted by the
husband for the benefit of the conjugal
partnership, and those contracted by the wife,
also for the same purpose, in the cases where
she may legally bind the partnership.
The petitioner-husband signed the continuing
guaranty and suretyship agreement as security
for the payment of the loan obtained by the
PBMCI from the private respondent in the
amount of P38,000,000. In Ayala Investment
and Development Corp. v. Court of Appeals ,61
this Court ruled that the signing as surety is
certainly not an exercise of an industry or
profession. It is not embarking in a business. No
matter how often an executive acted on or was
persuaded to act as surety for his own
employer, this should not be taken to mean that
he thereby embarked in the business of
suretyship or guaranty.
For the conjugal partnership to be liable for a
liability that should appertain to the husband
alone, there must be a showing that some
advantages accrued to the spouses. Certainly,
to make a conjugal partnership responsible for
a liability that should appertain alone to one of
the spouses is to frustrate the objective of the
New Civil Code to show the utmost concern for
the solidarity and well being of the family as a
unit. The husband, therefore, is denied the
power to assume unnecessary and unwarranted
risks to the financial stability of the conjugal
partnership.62 ςrνll
In this case, the private respondent failed to
prove that the conjugal partnership of the
petitioners was benefited by the petitioner-
husbands act of executing a continuing
guaranty and suretyship agreement with the
private respondent for and in behalf of PBMCI.
The contract of loan was between the private
respondent and the PBMCI, solely for the benefit
of the latter. No presumption can be inferred
from the fact that when the petitioner-husband
entered into an accommodation agreement or a
contract of surety, the conjugal partnership
would thereby be benefited. The private
respondent was burdened to establish that such
benefit redounded to the conjugal partnership.63
ςrνll
It could be argued that the petitioner-husband
was a member of the Board of Directors of
PBMCI and was one of its top twenty
stockholders, and that the shares of stocks of
the petitioner-husband and his family would
appreciate if the PBMCI could be rehabilitated
through the loans obtained; that the petitioner-
husbands career would be enhanced should
PBMCI survive because of the infusion of fresh
capital. However, these are not the benefits
contemplated by Article 161 of the New Civil
Code. The benefits must be those directly
resulting from the loan. They cannot merely be
a by-product or a spin-off of the loan itself.64
ςrνll
This is different from the situation where the
husband borrows money or receives services to
be used for his own business or profession. In
the Ayala case, we ruled that it is such a
contract that is one within the term obligation
for the benefit of the conjugal partnership.
Thus:ςηαñrοblεš νιr†υαl lαω lιbrαrÿ
(A) If the husband himself is the principal
obligor in the contract, i.e., he directly received
the money and services to be used in or for his
own business or his own profession, that
contract falls within the term obligations for the
benefit of the conjugal partnership. Here, no
actual benefit may be proved. It is enough that
the benefit to the family is apparent at the time
of the signing of the contract. From the very
nature of the contract of loan or services, the
family stands to benefit from the loan facility or
services to be rendered to the business or
profession of the husband. It is immaterial, if in
the end, his business or profession fails or does
not succeed.Simply stated, where the husband
contracts obligations on behalf of the family
business, the law presumes, and rightly so, that
such obligation will redound to the benefit of the
conjugal partnership.65 ςrνll
The Court held in the same case that the rulings
of the Court in Cobb-Perez and G-Tractors, Inc.
are not controlling because the husband, in
those cases, contracted the obligation for his
own business. In this case, the petitioner-
husband acted merely as a surety for the loan
contracted by the PBMCI from the private
respondent.
IN LIGHT OF ALL THE FOREGOING, the
petition is GRANTED. The Decision and
Resolution of the Court of Appeals are SET
ASIDE AND REVERSED. The assailed orders of
the RTC are AFFIRMED.
SO ORDERED.
G.R. No. L-29723 July 14, 1988
ANTONIO ZARAGOZA, plaintiff-appellee,
vs.
MARIA ANGELA FIDELINO and/or "JOHN
DOE," defendants MABINI INSURANCE &
FIDELITY CO., INC., surety-appellant.
NARVASA, J.:
Involved in this appeal is no more than the
procedure to hold a surety hable upon a
counter-bond posted by it for the release of an
automobile seized from a defendant in a
replevin action under a writ issued by the Trial
Court at the plaintiffs instance.
The suit for the replevy of the car was brought
by Antonio Zaragoza in the Court of First
Instance at Quezon City 1 against Ma. Angela
Fidelino and/or John Doe. His complaint alleged
that the car had been sold to Fidelino but the
latter had failed to pay the price in the manner
stipulated in their agreement. The car was taken
from Fidelino's possession by the sheriff on the
strength of a writ of delivery 2 but was promptly
returned to her on orders of the Court when a
surety bond for the car's releases 3 was posted
in her behalf "by Mabini Insurance & Fidelity
Co., Inc.
The action resulted in a judgment 4 for the
plaintiff the dispositive part of which reads as
follows:
WHEREFORE, judgment is hereby rendered in
favor of the plaintiff and against the defendant,
ordering the latter to pay to the plaintiff the sum
of P19,417.46, representing the balance of the
purchase price of the car sold including interest
thereon, collection charges, notarial fees and
sheriffs fees and expenses in conn with the
recovery of the vehicle sold; to pay liquidated
damage in the amount of P6,471.84 equivalent
to 33 1/3 % of the balance outstanding and to
pay the costs of this suit.
Within the reglementary period for taking an
appeal, Zaragoza moved for the amendment of
the decision so as to include the surety, Mabini
Insurance & Fidelity Co., Inc., as a party
solidarily liable with the defendant for the
payment of the sums awarded in the judgment.
5 Despite having been duly furnished with
copies of the motion and the notice of hearing,
neither Fidelino nor the surety company filed
any opposition to the motion, nor did either of
them appear at the hearing thereof. 6 The Trial
Court deemed the motion meritorious and
granted it. Its Order of April 16, 1968 7 decreed
the following:
WHEREFORE, the motion is hereby granted, and
the dispositive portion of the decision in this
case is hereby amended to read as follows:
WHEREFORE, judgment is hereby rendered in
favor of the plaintiff and against the defendant,
ordering defendant Maria Angela Fidelino and
her surety, the Mabini Insurance & Fidelity Co.,
Inc., to pay jointly and severally to the plaintiff
the sum of P19,417.46, representing the
balance of the purchase price of the car sold,
including interests thereon, collection charges,
notarial fees and sheriffs fees and expenses in
connection with the recovery of the vehicle sold,
liquidated damages in the amount of P6,471.84
equivalent to 33 1/3% of the balance
outstanding and to pay the costs of this suit.
No motion for reconsideration was filed or
appeal taken by the defendant Fidelino as
regards either the original or the amended
decision. It was the surety which presented a
motion for reconsideration, and upon its denial,
appealed to this Court. 8 It ascribes to the Court
a quo, as might be expected, reversible error in
amending the judgment in the manner just
described. It argues that the Lower Court never
acquired jurisdiction over it since no summons
was ever served on it, its filing of a counter-
bond not being equivalent to voluntary
submission to the Court's jurisdiction; Zaragoza
failed to make a proper application with notice
before finality of the decision as provided by
Section 20, Rule 57 of the Rules of Court; and
when the order amending the judgment was
promulgated, the judgment had already become
final, the running of the period of appeal not
having been suspended by Zaragoza's motion to
amend decision, 9 and so, the Court no longer
had authority to amend it on April 16, 1968.
The appellant surety deposits quite correctly,
that the situation at bar is governed by Section
10, Rule 60, in relation to Section 20, Rule 57,
of the Rules of Court. Section 10, Rule 60,
provides as follows:
SEC. 10. Judgment to include recovery against
sureties. — The amount, if any, to be awarded
to either party upon any bond filed by the other
in accordance with the provisions of this rule,
shag be claimed, ascertained, and granted
under the same procedure as prescribed in
section 20 of Rule 57.
And Section 20, Rule 57 reads as follows:
SEC. 20. Claim for damages on account of illegal
attachment. — If the judgment on the action be
in favor of the party against whom attachment
was issued, he may recover, upon the bond
given or deposit made by the attaching creditor,
any damages resulting from the attachment.
Such damages may be awarded only upon
application and after proper hearing, and shall
be included in the final judgment. The
application must be filed before the trial or
before appeal is perfected or before the
judgment becomes executory, with due notice
to the attaching creditor and his surety or
sureties, setting forth the facts showing his right
to damages and the amount thereof
xxx xxx xxx 10
It would seem at first blush that Section 20,
Rule 57 above quoted is not relevant. Its title
and first sentence speak [1] of an illegal
attachment, and [2] of a judgment "in favor of
the party against whom (said illegal)
attachment was issued." In the case at bar, the
writ of delivery was not illegal; and the
judgment was for, not against, the party in
whose favor the writ of delivery was issued. In
other words, it would appear that for Section 20,
Rule 57 to apply to the instant action," 11 the
judgment should have been "in favor of"
defendant Fidelino (the party "against whom"
the writ of delivery was issued). This however
was not the case. The judgment was in fact
against, NOT in favor of Fidelino.
It thus sums indeed that the first sentence of
Section 20 precludes recovery of damages by a
party against whom an attachment is issued and
enforced if the judgment be adverse to him. This
is not however correct. Although a party be
adjudged liable to another, ff it be established
that the attachment issued at the latter's
instance was wrongful and the former had
suffered injury thereby, recovery for damages
may be had by the party thus prejudiced by the
wrongful attachment, even if the judgment be
adverse to him. Slight reflection will show the
validity of this proposition. For it is entirely
possible for a plaintiff to have a meritorious
cause of action against a defendant but have no
proper ground for a preliminary attachment. In
such a case, if the plaintiff nevertheless applies
for and somehow succeeds in obtaining an
attachment, but is subsequently declared by
final judgment as not entitled thereto, and the
defendant shows that he has suffered damages
by reason of the attachment, there can be no
gainsaying that indemnification is justly due the
latter. So has this Court already had occasion to
rule, in Baron v. David, 51 Phil. 1, and Javellana
v. D.O. Plaza Enterprises, 32 SCRA 26].
Be all this as it may, the second and third
sentences of Section 20, Rule 57, in relation to
Section 10, Rule 60, are unquestionably
relevant to the matter of the surety's liability
upon a counter-bond for the discharge of a writ
of delivery in a replevin suit. 12 Under Section
10, Rule 60 (which makes reference "to either
party upon any bond filed by the other in
accordance with the provisions of this rule"
[60]), the surety's liability for damages upon its
counter-bond should "W claimed, ascertained,
and granted under the same procedure as
prescribed in section 20 of Rule 57; 13 and andd
section 20 pertinently decrees that '(s)uch
damages may be awarded only upon application
and after proper hearing, and shall be included
in the final judgment .. (which means that the
(application must be filed before the trial or
before appeal is perfected or before the
judgment becomes executory, with due notice
to the attaching creditor and his surety or
sureties, setting forth the facts showing his right
to damages and the amount thereof." Stated
otherwise, to hold a surety on a counter-bond
liable, what is entailed is (1) the filing of an
application therefor with the Court having
jurisdiction of the action; (2) the presentation
thereof before the judgment becomes executory
(or before the trial or before appeal is
perfected); (3) the statement in said application
of the facts showing the applicant's right to
damages and the amount thereof, (4) the giving
of due notice of the application to the attaching
creditor and his surety or sureties; and (5) the
holding of a proper hearing at which the
attaching creditor and the sureties may be
heard on the application. These requisites apply
not only in cases of seizure or delivery under
Rule 60, but also in cases of preliminary
injunctions under Rule 58, 14 and receiverships
under Rule 59. 15
It should be stressed, however, that
enforcement of a surety's liability on a counter-
bond given for the release of property seized
under a writ of preliminary attachment is
governed, not by said Section 20, but by
another specifically and specially dealing with
the matter; Section 17 of Rule 57, which reads
as follows:
SEC. 17. When execution returned unsatiated,
recovery had upon bond. — If the execution be
returned unsatisfied in whole or in part, the
surety or sureties on any counter-bond given
pursuant to the provisions of this rule to secure
the payment of the judgment shall become
charged on such counter-bond, and bound to
pay to the judgment creditor upon demand, the
amount due under the judgment, which amount
may be recovered from such surety or sureties
after notice and summary hearing in the same
action."
The record shows that the appellant surety
company bound itself "jointly and severally"
with the defendant Fidelino "in the sum of
PESOS FORTY EIGHT THOUSAND ONLY
(P48,000.00), Philippine Currency, which is
double the value of the property stated in the
affidavit of the plaintiff, for the delivery thereof
if such delivery is adjudged, or for the payment
of such sum to him as may be recovered against
the defendant and the costs of the action. 16
This being so, the appellant surety's liability
attached upon the promulgation of the verdict
against Fidelino. All that was necessary to
enforce the judgment against it was, as
aforestated, an application therefor with the
Court, with due notice to the surety, and a
proper hearing, i.e., that it be formally notified
that it was in truth being made responsible for
its co-principal's adjudicated prestation (in this
case, the payment of the balance of the
purchase price of the automobile which could no
longer be found and therefore could not be
ordered returned), 17 and an opportunity, at a
hearing called for the purpose, to show to the
Court why it should not be adjudged so
responsible. A separate action was not
necessary; it was in fact proscribed. 18 And
again, the record shows substantial compliance
with these basic requirements, obviously
imposed in deference to due process.
Appellant surety undoubtedly received copy of
Zaragoza's Motion to Amend Decision.19 That
motion made clear its purpose—that the
decision "be amended, or an appropriate order
be issued, to include .. (the surety) as a party
jointly and severally liable with the defendant to
the extent of the sums awarded in the decision
to be paid to plaintiff'-as well as the basis
thereof-the counter-bond filed by it by the
explicit terms of which it bound itself "jointly
and severally (with the defendant) .. for the
payment of such sum to him (plaintiff) as may
be recovered against the defendant and the cost
of the action." The motion contained, at the foot
thereof, a "notice that on Saturday, March 23,
1968, at 8:30 a.m., or as soon thereafter as the
matter may be heard, the .. (plaintiffs counsel
would) submit the foregoing motion for the
consideration of the Court." And likewise
indubitable is the fact that, as the Court a quo
has observed, "neither .. Fidelinos counsel nor
the surety company filed any opposition to said
motion, nor did they appear in the hearing of
the motion on March 23, 1968 .. (for which
reason) the motion was deemed submitted for
resolution." 20 The surety's omission to appear
at the hearing despite notice of course
constituted a waiver of the right to be heard on
the matter.
The surety's theory that never having been
served with summons, it never came under the
Lower Court's jurisdiction, is untenable. The
terms of the counter-bond voluntarily filed by it
in defendant's behalf leave no doubt of its
assent to be bound by the Court's adjudgment
of the defendant's liability, i.e., its acceptance
of the Court's jurisdiction. For in that
counterbond, it implicitly prayed for affirmative
relief; the release of the seized car, in
consideration of which it explicitly bound itself
solidarily with said defendant to answer for the
delivery of the car subject of the action "if such
delivery is adjudged," i.e., commanded by the
Court's judgment, or "for the payment of such
sum as may be recovered against the defendant
and the costs of the action," the reference to a
possible future judgment against the defendant,
and necessarily against itself, being certain and
unmistakable. The filing of that bond was clearly
an act of voluntary submission to the Court's
authority, which is one of the modes for the
acquisition of jurisdiction over a party.21
The same theory as that espoused by appellant
surety in this case was, in substance, passed
upon and declared to be without merit in a 1962
decision of this Court, Dee v. Masloff. 22 There,
a surety on a counter-bond given to release
property from receivership, also sought to avoid
liability by asserting that it was not a party to
the case, had never been made a party, and had
not been notified of the trial. The Court
overruled the contention, and upheld the
propriety of the amendment of the judgment
which ordered the appellant surety company to
pay — to the extent of its bond and jointly and
severally with defendant — the judgment
obligation. The Court ruled that since such
"amended judgment .. (had been) rendered
after the appellant surety company as party
jointly and severally liable with the defendant ..
for the damages already awarded to the
appellees, to which the appellant surety
company filed its "Opposition" and "Rejoinder"
to the "Reply to Opposition filed by the
appellees, without putting in issue the
reasonableness of the amount awarded for
damages but confining itself to the defense in
avoidance of liability on its bond that it was not
a party to the case and never made a party
therein and was not notified of the trial of the
case, and that the appellees were guilty of
laches, the requirement of hearing was fully
satisfied or complied with; .. (in any case,)
appellant surety company never prayed for an
opportunity to present evidence in its behalf."
The appellant surety's last argument that by the
time the Court amended its decision, the
decision had already become final, and
therefore unalterable, is also untenable. The
motion for amendment of the decision was
unquestionably in the nature of a motion for
reconsideration under Section 1 (c), Rule 37 of
the Rules of Court which, having been filed
within "the period for perfecting an appeal," had
the effect of interrupting said period of appeal.
23
WHEREFORE, judgment is hereby rendered
AFFIRMING in toto the Decision of the Court a
quo dated February 12, 1968, as amended by
the Order of April 16, 1968. Costs against the
appellant surety.
G.R. No. 135830 September 30, 2005 properties). His brother, Teofilo ("Teofilo"), died and on 15 September 1995, a writ of
JUAN DE DIOS CARLOS, Petitioners, intestate in 1992. At the time of his death, preliminary attachment. Carlos posted a bond
vs. Teofilo was apparently married to Sandoval, and for ₱20,000,000.00 issued by herein petitioner
FELICIDAD SANDOVAL, also known as cohabiting with her and their child, respondent SIDDCOR Insurance Corporation (SIDDCOR).5
FELICIDAD S. VDA. DE CARLOS or Teofilo II. Nonetheless, Carlos alleged in his Shortly thereafter, a Notice of Garnishment was
FELICIDAD S. CARLOS or FELICIDAD Complaint that Teofilo and Sandoval were not served upon the Philippine National Bank (PNB)
SANDOVAL DE CARLOS, and TEOFILO validly married as they had not obtained any over the deposit accounts maintained by
CARLOS II, Respondent. marriage license.2 Furthermore, Carlos also respondents.
x--------------------------------------------------- asserted that Teofilo II could not be considered Respondents filed an Urgent Motion to
----------------x as Teofilo’s child. As a result, Carlos concluded Discharge the Writ of Attachment, which was
G.R. No. 136035 that he was also the sole heir of his brother opposed by Carlos. On 4 December 1995, the
SIDDCOR (now MEGA PACIFIC) Teofilo, since the latter had died without leaving RTC rendered an order denying the motion. This
INSURANCE CORPORATION, Petitioners, any heirs. caused respondents to file a Petition for
vs. Carlos also claimed that Teofilo, prior to their Certiorari with the Court of Appeals, seeking to
FELICIAD SANDOVAL VDA. DE CARLOS and father Felix’s death in 1963, developed a set aside the RTC order granting the writ of
TEOFILO CARLOS II, Respondent. scheme to save the elder Carlos’s estate from preliminary attachment denying the motion for
x--------------------------------------------------- inheritance taxes. Under the scheme, the the discharge of the writ. This case was
---------------x properties of the father would be transferred to docketed as CA-G.R. SP No. 39267.6
G.R. No. 137743 Teofilo who would, in turn, see to it that the On 27 February 1996, the Court of Appeals
SIDDCOR (now MEGA PACIFIC) shares of the legal heirs are protected and Second Division promulgated its Decision in CA-
INSURANCE CORPORATION, Petitioners, delivered to them. Felix assented to the plan, G.R. SP No. 39267, wherein it granted the
vs. and the subject properties were transferred in Petition for Certiorari and ordered the discharge
HON. COURT OF APPEALS (FORMER the name of Teofilo. After Teofilo’s death, Carlos and dissolution of the Writ of Attachment and
SPECIAL FOURTH DIVISION), HON. entered into certain agreements with Sandoval Notice of Garnishment.7 The Court of Appeals
ALBERTO L. LERMA and/or the REGIONAL in connection with the subject properties. Carlos found that there was no sufficient cause of
TRIAL COURT OF THE CITY OF did so, believing that the latter was the lawful action to warrant the preliminary attachment,
MUNTINLUPA, BRANCH 256, FELICIDAD wife of his brother Teofilo. Subsequently since Carlos had merely alleged general
SANDOVAL, also known as FELICIDAD S. though, Carlos discovered that Sandoval and his averments in order to support his prayer.8
VDA. DE CARLOS OR FELICIDAD S. CARLOS brother were never validly married, as their Carlos elevated the said Decision to this Court
OR FELICIDAD SANDOVAL CARLOS OR marriage was contracted without a marriage by way of Petition for Review on Certiorari,
FELICIDAD SANDOVAL VDA. DE CARLOS license.3 which was docketed as G.R. No. L-125717. In a
and TEOFILO CARLOS II, Respondent. Carlos now sought to nullify these agreements Resolution dated 21 October 1996, the Court
DECISION with Sandoval for want of consideration, the denied Carlos’s Petition, and thus the Court of
Tinga, J.: premise for these contracts being non-existent. Appeals’ Decision ordering the dissolution of the
These consolidated petitions emanated from a Thus, Carlos prayed of the RTC to declare the Writ of Attachment and Notice of Garnishment
civil case filed by Juan de Dios Carlos ("Carlos") alleged marriage between Teofilo and Sandoval became final.
against respondents Felicidad Sandoval void ab initio, provided that Teofilo died without In the meantime, the hearing on Carlos’s
("Sandoval") and Teofilo Carlos II (Teofilo II) issue, order that new titles covering the subject Complaint ensued before the RTC. Respondents
docketed with the Regional Trial Court (RTC) of properties be issued in the name of Carlos, and duly filed their Answer and thereafter filed a
Muntinlupa City as Civil Case No. 95-135. require Sandoval to restitute Carlos in the Motion for Summary Judgment. Carlos opposed
In his Complaint before the RTC, Carlos amount of ₱18,924,800.00.4 the motion and countered with his own Motion
asserted that he was the sole surviving Carlos likewise prayed for the issuance of the for Summary Judgment. On 8 April 1996, the
compulsory heir of his parents, Felix B. Carlos provisional relief of preliminary attachment. The RTC rendered a summary judgment in favor of
and Felipa Elemia,1 who had acquired during RTC issued an Order dated 7 September 1995 Carlos. Carlos’s victory was wholesale, with the
their marriage, six parcels of land (subject granting the prayer for preliminary attachment, RTC making the following pronouncements:
1. Declaring the marriage between defendant
Felicidad Sandoval and Teofilo Carlos
solemnized at Silang, Cavite, on May 14, 1962,
evidenced by the Marriage Contract submitted
in this case, null and void ab initio for lack of the
requisite marriage license;
2. Declaring that the defendant minor, Teofilo
S. Carlos II, is not the natural, illegitimate, or
legally adopted child of the late Teofilo E.
Carlos;
3. Ordering defendant Sandoval to pay and
restitute to plaintiff the sum of ₱18,924,800.00,
together with the interest thereon at the legal
rate from date of filing of the instant complaint
until fully paid;
4. Declaring plaintiff as the sole and exclusive
owner of the parcel of land, less the portion
adjudicated to the plaintiffs in Civil Case No.
11975, covered by TCT No. 139061 of the
Register of Deeds of Makati City, and ordering
said Register of Deeds to cancel said title and to
issue another title in the sole name of plaintiff
herein;
5. Declaring the Contract, Annex K of the
Complaint, between plaintiff and defendant
Sandoval null and void, and ordering the
Register of Deeds of Makati City to cancel TCT
No. 139058 in the name of Teofilo Carlos, and
to issue another title in the sole name of the
plaintiff herein;
6. Declaring the Contract, Annex M of the
Complaint, between plaintiff and defendant
Sandoval null and void;
7. Ordering the cancellation of TCT No. 210877
in the names of defendant Sandoval and
defendant minor Teofilo S. Carlos II and
ordering the Register of Deeds of Manila to issue
another title in the exclusive name of plaintiff
herein.
8. Ordering the cancellation of TCT No. 210878
in the names of defendant Sandoval and
defendant minor Teofilo S. Carlos II and
ordering the Register of Deeds of Manila to issue
another title in the sole name of plaintiff herein.9
Upon promulgation of the Summary Judgment,
Carlos moved before the RTC for execution
pending appeal. The RTC granted the motion for
execution pending appeal upon the filing of a
bond.10 On 27 May 1996, the RTC issued a Writ
of Execution.
Meanwhile, respondents filed a Motion for
Reconsideration of the Summary Judgment,
which was denied in an Order dated 20 May
1996. Respondents then appealed the RTC
Decision to the Court of Appeals, wherein such
appeal was docketed as CA-G.R. CV No. 53229.
The case was raffled to the appellate courts’
Fourteenth Division for completion of records.
Sandoval and Carlos also filed a Petition for
Certiorari with Temporary Restraining Order
dated 2 June 1996. This special civil action
primarily attacked the allowance of execution
pending appeal, and prayed for the annulment
of the Order granting execution pending appeal,
and of the Writ of Execution
On 10 December 1996, in CA-G.R. CV No.
53229, respondents filed a Motion for Judgment
On the Attachment Bond. They noted that the
Court of Appeals had already ruled that the Writ
of Preliminary Attachment issued by the RTC
was improperly granted and that its Decision, as
affirmed by the Supreme Court, had attained
finality. Accordingly, they were entitled to
damages under Section 20, Rule 57 of the then
Rules of Civil Procedure, which governed claims
for damages on account of unlawful attachment.
In support of their allegation of damages, they
cite the Notice of Garnishment served on PNB
Malolos Branch, where Felicidad Carlos
maintained
deposits amounting to ₱15,546,121.98.11 Also
presented in support of the motion was a Notice
of Delivery/Payment by the RTC Sheriff,
directing the PNB Malolos Branch to deliver the
amounts previously garnished by virtue of the
Writ of Execution dated 27 May 1996;12 a
Manifestation filed by PNB dated 19 July 1996 in
CA-G.R. SP No. 40819, stating that PNB had
already delivered to the RTC Sheriff on 27 June
1996 the amount of ₱15,384,509.98 drawn
against the accounts of Carlos; and a
Certification to the same effect issued by the
PNB Malolos Branch. In an Addendum to Motion
for Judgment on the Attachment Bond,
respondents additionally prayed for moral and
exemplary damages.13
After various pleadings were duly filed by the
parties, the Court of Appeals Special Fourth
Division issued a Resolution dated 23 March
1998, certifying that all the necessary pleadings
have been filed, and that the case may already
be referred to the Raffle Committee for
assignment to a ponente for study and report.
The same Resolution likewise denied without
elaboration a Motion to Dismiss on the ground
of forum-shopping filed earlier by Carlos.14
On such denial, Carlos filed a Motion for
Reconsideration. Respondents likewise filed a
Motion for Partial Reconsideration dated 17 April
1998, arguing that under the Revised Internal
Rules of the Court of Appeals (RIRCA), the case
may be re-raffled for assignment for study and
report only after there is a resolution that the
case is deemed submitted for decision.15 They
pointed out that re-raffle could not yet be
effected, as there were still pending incidents,
particularly the motions for reconsideration of
Carlos and themselves, as well as the Motion for
Judgment on Attachment Bond.
On 26 June 1998, the Court of Appeals Former
Special Fourth Division promulgated two
resolutions.16 The first, in response to Carlos’s
Motion for Reconsideration, again denied
Carlos’s Motion to Dismiss the Appeal and
Motion for Suspension, but explained the
reasons for such denial.
The second resolution is at the center of the
present petitions. The assailed Resolution
agreed with respondents that it was first
necessary to resolve the pending incidents
before the case could be re-raffled for study and
report. Accordingly, the Court of Appeals
proceeded to rule on these pending incidents.
While the first resolution dwelt on the pending
motions filed by Carlos, this Resolution tackled
the other matter left unresolved, the Motion for
Judgment on Attachment Bond. The Court of
Appeals found the claim for damages
meritorious, citing the earlier decisions ruling
that Carlos was not entitled to the preliminary
attachment. Invoking Section 20, Rule 57 of the
Rules of Court, as well as jurisprudence,17 the
Court of Appeals ruled that it was not necessary
for the determination of damages on the
injunction bond to await the decision on appeal.
The Court of Appeals then proceeded to
determine to what damages respondents were
entitled to. In ruling that the award of actual
damages was warranted, the court noted:
It is also not disputed that the PNB, on June 27,
1996, issued two manager’s checks: MC No.
938541 for ₱4,932,621.09 and MC 938542 for
₱10,451,888.89 payable to the order of "Luis C.
Bucayon II, Sheriff IV, RTC, Branch 256,
Muntinlupa", duly received by the latter in the
total amount of PESOS FIFTEEN MILLION THREE
HUNDRED EIGHTY FOUR THOUSAND FIVE
HUNDRED NINE & 98/100 (₱15,384,509.98),
drawn against the accounts of Ms. Felicidad
Sandoval Vda. de Carlos which were earlier
garnished for the satisfaction of the above-
mentioned writ of attachment (Annex "E",
Motion for Judgment on the Attachment Bond,
pp. 7-8)18
....
The contention of [Carlos] that the writ of
attachment was not implemented falls flat on
the face of the manifestation of PNB that the
delivery of the garnished ₱15,384,509.98 to him
was effected through the sheriff.19
The Court of Appeals found that moral and
exemplary damages were not warranted, there
being no malice in pursuing the attachment. The
appellate court also found the claim of
₱2,000,000.00 for attorney’s fees as excessive,
and reduced the sum by half. Correspondingly,
the dispositive portion of the assailed Resolution
reads:
WHEREFORE, premises considered, judgment is
hereby rendered against the attachment bond,
ordering SIDDCOR INSURANCE CORPORATION
and plaintiff-appellee to pay defendants-
appellants, jointly and severally, the sum of
₱15,384,509.98 and 12% interest per annum
from June 27, 1996 when the unlawful
garnishment was effected until fully paid and
₱1,000,000.00 as attorney’s fees with 6%
interest thereon from the trial court’s decision
on April 8, 1986 until fully paid.
SO ORDERED.20
Both Carlos and SIDDCOR filed their respective
motions for reconsideration of the Resolution.
For their part, respondents filed a Motion for
Immediate Execution dated 7 August 1998 in
regard to the Resolution of 26 June 1998
awarding them damages.
In the Resolution dated 10 October 1998,21 the
Court of Appeals denied the motions for
reconsideration and granted the Motion for
Immediate Execution. In granting the Motion for
Immediate Execution, the Court of Appeals cited
the reasons that the appeal to be undertaken
from the 26 June 1998 Resolution was patently
dilatory; that there were no material and
substantial defenses against the motion for
judgment on the attachment bond, rendering
the appeal pro-forma and dilatory; that
Sandoval was of advanced age and might not
enjoy the fruits of the judgment on the
attachment bond; and that immediate
execution would end her suffering due to the
arbitrary garnishment of her account pursuant
to an improper attachment.22
In its Motion for Reconsideration, SIDDCOR
explicitly assailed the allowance of the Motion
for Immediate Execution.23 This was denied by
the Court of Appeals in a Resolution dated 22
December 1998.24
From these antecedents, the following petitions
were filed before this Court:
G.R. No. 135830
This Appeal by Certiorari with Prayer for
Temporary Restraining Order/Preliminary
Injunction dated 26 October 1998 filed by
Carlos assailed the two resolutions of the Court
of Appeals both dated 26 June 1998, as well as
the Resolution of 10 October 1998, which
denied Carlos’s motion for reconsideration.
Carlos argues that the Court of Appeals, through
the Former Special Fourth Division, could not
have resolved the Motion for Judgment on the
Attachment Bond since the case had not yet
been re-raffled under the two-raffle system for
study and report; that the Court of Appeals
erred in resolving the motion without
conducting any hearing; that the Court of
Appeals had no jurisdiction over the motion as
the docketing fees had not yet been filed; that
the motion for judgment, which did not contain
any certification against forum-shopping, was
an application subject to the requirements of
certification against forum-shopping; that there
was no supporting evidence to support the
award of damages; and that the Court of
Appeals committed grave abuse of discretion in
denying the Motion for Reconsideration without
adverting to specific reasons mentioned for the
denial of each issue.25
Carlos likewise ascribes grave abuse of
discretion to the Court of Appeals in its other
Resolution dated 26 June 1998 for its refusal to
dismiss CA-G.R. CV No. 53229 on the ground of
forum-shopping, adding that the appellate court
should have deferred resolution of the Motion
for Judgment on the Attachment Bond
considering the prejudicial question raised in
Carlos’s motion to dismiss the main case on the
ground of forum-shopping.
G.R. No. 136035
This concerns a Petition for Review filed by
SIDDCOR, likewise challenging the Resolution of
26 June 1998 of the Court of Appeals and the
10 October 1998 Resolution wherein Siddcor’s
Motion for Reconsideration, among others, was
denied. Siddcor argues therein that the Court of
Appeals erred in ruling on the motion for
damages without awaiting judgment in the main
case; granting that damages may be awarded,
these should encompass only such damages
incurred during the pendency of the appeal; and
that a hearing was necessary to prove the claim
for damages and the appellate court erred in
granting the award for damages despite lack of
hearing.
G.R. No. 137743
The third petition for adjudication, a Petition for
Certiorari under Rule 65 with Prayer for
Temporary Restraining Order or Preliminary
Injunction, was also filed by SIDDCOR. This
petition, dated 8 March 1999, specifically assails
the allowance by the Court of Appeals of the
immediate execution of the award of damages,
made through the resolutions dated 10 October
1998 and 22 December 1998.
SIDDCOR hereunder argues that Section 2, Rule
39 of the Rules of Civil Procedure requires that
execution of a judgment or final order pending
appeal may be made only on motion of the
prevailing party and may be made "even before
the expiration of the period to appeal." 26
Respondents had argued in their Motion for
Immediate Execution that the judgment sought
to be executed (that on the attachment bond)
was interlocutory and not appealable, yet cited
rulings on execution pending appeal under
Section 2, Rule 39 in support of their position.
SIDDCOR cites this inconsistency as proof of a
change of theory on the part of respondents
which could not be done for the theories are
incompatible. Such being the case, SIDDCOR
argues, the Court of Appeals gravely abused its
discretion in granting immediate execution since
respondents had filed its motion on the premise
that the award on the judgment bond was
interlocutory and not appealable. SIDDCOR also
claims that the judgment on the attachment
bond is not interlocutory, citing Stronghold
Insurance Co., Inc. v. Court of Appeals27
wherein it was ruled that such indeed
constitutes a final and appealable order.
SIDDCOR points out that no hearing was
conducted on the Motion for Immediate
Execution despite the requirement in Section 2,
Rule 39 that "discretionary execution may only
issue upon good reasons to be stated in a
special order after due hearing." SIDDCOR
likewise notes that the motion granting
immediate execution was granted in the very
same resolution which had denied the motion
for reconsideration of the resolution sought to
be immediately executed. For SIDDCOR, such
constituted a denial of procedural due process
insofar as its statutory right to appeal was
concerned, as the resolution that it intended to
appeal from was already the subject of
immediate execution.
Finally, SIDDCOR contests the special reasons
cited by the Court of Appeals in granting the
Motion for Immediate Execution.
Facts Arising Subsequent to the Filing of Instant
Petitions
On 7 May 1999, the Court of Appeals issued a
Writ of Execution directing the enforcement of
the judgment on the attachment bond.28
However, in a Resolution dated 9 June 1999,
this Court through the First Division issued a
Temporary Restraining Order, enjoining the
enforcement of the said Writ of Execution.
On 15 October 2002, the Court of Appeals First
Division rendered a Decision29 on the merits of
CA-G.R. CV No. 53229, setting aside the
Summary Judgment and ordering the remand of
the case for further proceedings.30 Both parties
filed their respective motions for
reconsideration.31 In addition, Carlos filed a
motion to inhibit the author of the assailed
decision, Justice Rebecca de Guia-Salvador,32
who thereafter agreed to inhibit herself.33 Then
on 7 August 2003, the Court of Appeals Former
First Division issued a Resolution deferring
action on the motions for reconsideration in light
of the temporary restraining order issued by this
Court until the resolution of the present
petitions.
The factual background may be complicated,
but the court need only concern itself with the
propriety of the judgment on the attachment
bond and the subsequent moves to secure
immediate execution of such judgment. Should
this Court be called upon to tackle the merits of
the original action, Carlos’s complaint, it shall be
in the review of the final resolution of the Court
of Appeals in CA-G.R. CV No. 53229.
Consolidation of Issues in
G.R. Nos. 135830 and 136035
The petitions in G.R. Nos. 135830 and 136035
are concerned with the award of damages on
the attachment bond. They may be treated
separately from the petition in G.R. No. 137743,
which relates to the immediate execution of the
said award.
We consolidate the main issues in G.R. Nos.
135830 and 136035, as follows: (1) whether the
assailed judgment on the attachment bond
could have been rendered, as it was, prior to the
adjudication of the main case; (2) whether the
Court of Appeals properly complied with the
hearing requirement under Section 20, Rule 57
prior to its judgment on the attachment bond;
and (3) whether the Court of Appeals properly
ascertained the amount of damages it awarded
in the judgment on the attachment bond.
Resolving these issues requires the
determination of the proper scope and import of
Section 20, Rule 57 of the 1997 Rules of Civil
Procedure. The provision governs the disposal
of claims for damages on account of improper,
irregular or excessive attachment.
SECTION 20. Claim for damages on account of
improper, irregular or excessive attachment.—
An application for damages on account of
improper, irregular or excessive attachment
must be filed before the trial or before appeal is
perfected or before the judgment becomes
executory, with due notice to the attaching
obligee or his surety or sureties, setting forth
the facts showing his right to damages and the
amount thereof. Such damages may be
awarded only after proper hearing and
shall be included in the judgment on the
main case.
If the judgment of the appellate court be
favorable to the party against whom the
attachment was issued, he must claim damages
sustained during the pendency of the appeal by
filing an application in the appellate court with
notice to the party in whose favor the
attachment was issued or his surety or sureties,
before the judgment of the appellate court
becomes executory. The appellate court may
allow the application to be heard and decided by
the trial court.
Nothing herein contained shall prevent the party
against whom the attachment was issued from
recovering in the same action the damages
awarded to him from any property of the
attaching obligee not exempt from execution
should the bond or deposit given by the latter
be insufficient or fail to fully satisfy the award.
(Emphasis supplied.)
Section 20 essentially allows the application to
be filed at any time before the judgment
becomes executory. It should be filed in the
same case that is the main action, and cannot
be instituted separately.34 It should be filed with
the court having jurisdiction over the case at the
time of the application.35 The remedy provided
by law is exclusive and by failing to file a motion
for the determination of the damages on time
and while the judgment is still under the control
of the court, the claimant loses his right to
damages.36
There is no question in this case that the Motion
for Judgment on the Attachment Bond filed by
respondents on 10 December 1996 was
properly filed since it was filed with the Court of
Appeals during the pendency of the appeal in
the main case and also as an incident thereto.
The core questions though lie in the proper
interpretation of the condition under Section 20,
Rule 57 that reads: "Such damages may be
awarded only after proper hearing and shall be
included in the judgment on the main case."
Petitioners assert that there was no proper
hearing on the application for damages and that
the Court of Appeals had wrongfully acted on
the application in that it resolved it prior to the
rendition of the main judgment.
"Such Damages May Be Awarded
Only After Proper Hearing…."
We first discuss whether the "proper hearing"
requirement under Section 20, Rule 57 had
been satisfied prior to the award by the Court of
Appeals of damages on the attachment bond.
Section 20 of Rule 57 requires that there be a
"proper hearing" before the application for
damages on the attachment bond may be
granted. The hearing requirement ties with the
indispensable demand of procedural due
process. Due notice to the adverse party and its
surety setting forth the facts supporting the
applicant's right to damages and the amount
thereof under the bond is essential. No
judgment for damages may be entered and
executed against the surety without giving it an
opportunity to be heard as to the reality or
reasonableness of the damages resulting from
the wrongful issuance of the writ.37
In Paramount Insurance v. Court of Appeals,38
the Court held that under the rule, it was neither
mandatory nor fatal that there should be a
separate hearing in order that damages upon
the bond can be claimed, ascertained and
awarded.39 What is necessary only is for the
attaching party and his surety or sureties to be
duly notified and given the opportunity to be
heard.40
In this case, both Carlos and SIDDCOR were
duly notified by the appellate court of the Motion
for Judgment on the Attachment Bond and were
required to file their respective comments
thereto.41 Carlos and SIDDCOR filed their
respective comments in opposition to private
respondents’ motion.42 Clearly, all the relevant
parties had been afforded the bare right to be
heard on the matter.
Concededly, the facts of this case differ from
that in Paramount, wherein the award of
damages was predicated under Section 8, Rule
58, and the trial on the merits included the claim
for damages on the attachment bond. The Court
did note therein that the counsel of the surety
was present during the hearings.43 In this case,
unlike in Paramount, there were no open court
hearings conducted by the Court of Appeals, and
it is precisely this absence that the petitioners
assert as fatal.
Plainly, there is no express requirement under
the rule that the hearing be done in open court,
or that the parties be allowed to confront
adverse witnesses to the claim of damages on
the bond. The proper scope of the hearing
requirement was explained before Paramount in
Peroxide Philippines Corp. v. Court of Appeals,44
thus:
. . . [It] is undeniable that when the attachment
is challenged for having been illegally or
improperly issued, there must be a hearing with
the burden of proof to sustain the writ being on
the attaching creditor. That hearing embraces
not only the right to present evidence but also
a reasonable opportunity to know the claims of
the opposing parties and meet them. The right
to submit arguments implies that opportunity,
otherwise the right would be a barren one. It
means a fair and open hearing.
From this pronouncement, we can discern that
the "proper hearing" contemplated would not
merely encompass the right of the parties to
submit their respective positions, but also to
present evidence in support of their claims, and
to rebut the submissions and evidence of the
adverse party. This is especially crucial
considering that the necessary elements to be
established in an application for damages are
essentially factual: namely, the fact of damage
or injury, and the quantifiable amount of
damages sustained. Such matters cannot be
established on the mere say-so of the applicant,
but require evidentiary support. At the same
time, there was no equivocal statement from
the Court in Peroxide that the hearing required
under the rule should be a full-blown hearing on
the merits
In this case, we rule that the demands of a
"proper hearing" were satisfied as of the time
the Court of Appeals rendered its assailed
judgment on the attachment bond. The
circumstances in this case that we consider
particularly telling are the settled premises that
the judicial finding on the wrongfulness of the
attachment was then already conclusive and
beyond review, and that the amount of actual
damages sustained was likewise indubitable as
it indeed could be found in the official case
record in CA-G.R. CV No. 53229. As a result,
petitioners would have been precluded from
either raising the defenses that the preliminary
attachment was valid or disputing the amount
of actual damages sustained by reason of the
garnishment. The only matter of controversy
that could be litigable through the traditional
hearing would be the matter of moral and
exemplary damages, but the Court of Appeals
appropriately chose not to award such
damages.
Moreover, petitioners were afforded the
opportunity to counter the arguments extended
by the respondents. They fully availed of that
right by submitting their respective
comments/oppositions. In fine, the due process
guarantee has been satisfied in this case.
It should be noted that this case poses a
situation different from what is normally
contemplated under Section 20, Rule 57—
wherein the very wrongfulness of the
attachment remains one of the issues in
contention in the main case. In such a case,
there would be a greater demand for a more
extensive hearing on the application of
damages. The modality of hearing should
remain within the discretion of the court having
jurisdiction to hear the application for damages.
The only demand, concordant to due process,
would be the satisfaction of the right to be
heard, to present evidence, and to rebut the
evidence and arguments of the opposing party.
Some disquisition is necessary on whether or
not, as petitioners submit, a full-blown hearing
in open court is compulsory under Section 20,
Rule 57. To impose this as a mandatory
requirement would ultimately prove too onerous
to our judicial system. Perhaps such a demand
would be less burdensome on the regional trial
courts, which, as a matter of routine, receive
testimonial or documentary evidence offered de
novo, and to formulate conclusions on the
admissibility and credibility of the same.
However, a different situation applies if it is the
Court of Appeals or the Supreme Court before
which the application for damages is filed. Both
these courts, which are capacitated to receive
and act on such actions, are generally not triers
of facts, and do not, in the course of daily
routine, conduct hearings. It is partly for such
reason that Section 20, Rule 57 authorizes
these appellate courts to refer the application
for damages to the trial court for hearing and
decision. The trial courts are functionally
attuned to ascertain and evaluate at the first
instance the necessary factual premises that
would establish the right to damages. Still,
reference of the application for damages to the
trial court is discretionary on the part of the
appellate courts. The latter, despite their
traditional appellate jurisdiction and review
function, are still empowered under Section 20
to rule on the application for damages,
notwithstanding the factual dimension such
question presents.
To impose as mandatory on the Court of Appeals
or the Supreme Court to hear the application for
damages through full-blown hearings in open
court is supremely unwise and beyond the
demands of Section 20, Rule 57. The effect
would be unduly disruptive on the daily
workflow of appellate courts such as the Court
of Appeals and the Supreme Court, which rarely
conduct open court hearings. Neither could the
Court see what is so markedly special about an
application for damages, fact-oriented as it may
be, that would require it to be heard by the
appellate courts in open court when no such
mandatory rule applies to other judicial matters
for resolution that are also factual in nature.
For example, the review of death penalty
convictions by the Court of Appeals and the
Supreme Court necessitates a thorough
evaluation of the evidence presented,
notwithstanding the prior factual appreciation
made by the trial court.45 Notwithstanding the
factual nature of the questions involved, there
is no rule requiring the Court of Appeals or the
Supreme Court to call death penalty cases for
hearing or oral argument. If no such mandatory
rule for hearing is imposed on the appellate
courts when the supreme penalty of death is
involved, why then should an exceptional rule
be imposed in the case for the relatively
insignificant application for damages on the
attachment bond?
If open court hearings are ever resorted to by
appellate courts, such result from the exercise
of discretion rather than by imposition by
statute or procedural rule. Indeed, there is no
existing statute, procedural rule, or
jurisprudential fiat that makes it mandatory on
the Court of Appeals or the Supreme Court to
conduct an open-court hearing on any matter
for resolution. There is nothing demonstrably
urgent with an application for damages under
Section 20, Rule 57 that would necessitate this
Court to adopt an unprecedented rule
mandating itself or the Court of Appeals to
conduct full-blown open court hearings on a
particular type of action.
This pronouncement does not contradict our
ruling in Hanil Development v. IAC,46 which
Carlos interprets as requiring the Court of
Appeals to conduct a proper hearing on an
application for damages on the attachment
bond. Hanil concerned the refusal by the
Intermediate Appellate Court (now Court of
Appeals) to take cognizance of the application
for damages on the attachment bond, such
refusal being reversed by the Court, which ruled
that the Intermediate Appellate Court (IAC) had
jurisdiction to accept and rule on such
application. While the Court therein recognized
that the IAC was empowered to try cases and
conduct hearings, or otherwise perform acts
necessary to resolve factual issues in cases,47 it
did not require the appellate court to conduct a
hearing in open court, but merely to reinstate
the application for damages.
Admittedly, the dispositive portion of Hanil
required the Court of Appeals to conduct
hearings on the application for damages,48 but
nowhere in the decision was a general rule laid
down mandating the appellate court to conduct
such hearings in open court. The ascertainment
of the need to conduct full-blown hearings is
best left to the discretion of the appellate court
which chooses to hear the application. At the
same time, the Court cautions the appellate
courts to carefully exercise their discretion in
determining the need for open-court hearings
on the application for damages on the
attachment bond. The Court does not sanction
the indolent award of damages on the
attachment bond by the appellate court without
affording the adverse party and the bonding
company concerned the opportunity to present
their sides and adduce evidence in their behalf,
or on the basis of unsubstantiated evidence.
"…And Shall be Included in the
Judgment on the Main Case"
Section 20, Rule 57 does state that the award
of damages shall be included in the judgment
on the main case, and seemingly indicates that
it should not be rendered prior to the
adjudication of the main case.
The rule, which guarantees a right to damages
incurred by reason of wrongful attachment, has
long been recognized in this jurisdiction.49
Under Section 20, Rule 57 of the 1964 Rules of
Court, it was provided that there must be first a
judgment on the action in favor of the party
against whom attachment was issued before
damages can be claimed by such party.50 The
Court however subsequently clarified that under
the rule, "recovery for damages may be had by
the party thus prejudiced by the wrongful
attachment, even if the judgment be adverse to
him."51
The language used in the 1997 revision of the
Rules of Civil Procedure leaves no doubt that
there is no longer need for a favorable judgment
in favor of the party against whom attachment
was issued in order that damages may be
awarded. It is indubitable that even a party who
loses the action in main but is able to establish
a right to damages by reason of improper,
irregular, or excessive attachment may be
entitled to damages. This bolsters the notion
that the claim for damages arising from such
wrongful attachment may arise and be decided
separately from the merits of the main action.
As noted by the Court in Philippine Charter
Insurance Corp. v. Court of Appeals:52
The surety does not, to be sure, become liable
on its bond simply because judgment is
subsequently rendered against the party who
obtained the preliminary attachment. The
surety becomes liable only when and if
"the court shall finally adjudge that the
applicant was not entitled to the
attachment." This is so regardless of the
nature and character of the judgment on
the merits of the principal claims,
counterclaims or cross-claims, etc.
asserted by the parties against each other.
Indeed, since an applicant's cause of
action may be entirely different from the
ground relied upon by him for a
preliminary attachment, it may well be that
although the evidence warrants judgment
in favor of said applicant, the proofs may
nevertheless also establish that said
applicant's proferred ground for
attachment was inexistent or specious and
hence, the writ should not have issued at
all; i.e., he was not entitled thereto in the first
place. In that event, the final verdict should
logically award to the applicant the relief sought
in his basic pleading, but at the same time
sentence him—usually on the basis of a
counterclaim—to pay damages caused to his
adversary by the wrongful attachment.
[Emphasis supplied.]
Moreover, a separate rule—Section 8, Rule 58—
covers instances when it is the trial court that
awards damages upon the bond for preliminary
injunction of the adverse party. Tellingly, it
requires that the amount of damages to be
awarded be claimed, ascertained, and awarded
under the same procedure prescribed in Section
20 of Rule 57.
In this case, we are confronted with a situation
wherein the determination that the attachment
was wrongful did not come from the trial court,
or any court having jurisdiction over the main
action. It was rendered by the Court of Appeals
in the exercise of its certiorari jurisdiction in the
original action reviewing the propriety of the
issuance of the Writ of Preliminary Attachment
against the private respondents. Said ruling
attained finality when it was affirmed by this
Court.
The courts are thus bound to respect the
conclusiveness of this final judgment, deeming
as it does the allowance by the RTC of
preliminary attachment as improper. This
conclusion is no longer subject to review, even
by the court called upon to resolve the
application for damages on the attachment
bond. The only matter left for adjudication is the
proper amount of damages.
Nevertheless, Section 20, Rule 57 explicitly
provides that the award for damages be
included in the judgment on the main case. This
point was apparently not lost on the Court of
Appeals when it rendered its Resolution dated
23 March 1998, certifying that the case may
now be referred to the Raffle Committee for
assignment to a ponente. The appellate court
stated therein: "The Resolution of defendants-
appellants’ motion for judgment on the
attachment may be incorporated in the decision
by the ponente for study and report,"53 and such
observation is in conformity with Section 20.
However, this reasoning was assailed by
respondents, who argued that the motion for
judgment on the attachment bond was a
pending incident that should be decided before
the case can be re-raffled to a ponente for
decision. Respondents may be generally correct
on the point that a case can only be deemed
submitted for decision only after all pending
incidents are resolved. Yet since Section 20,
Rule 57 provides that their application for
damages on the attachment bond "shall be
included in the judgment on the main case," it
is clear that the award for damages need not be
resolved before the case is submitted for
decision, but should instead be resolved and
included in the judgment on the main case, or
the decision on the Appeal by Certiorari filed by
the respondents.
Thus, the action of the Court of Appeals in
resolving the application for damages even
before the main judgment was issued does not
conform to Section 20, Rule 57. However, the
special particular circumstances of this case
lead us to rule that such error is not mortal to
the award of damages.
As noted earlier, the award of damages was
made after a proper hearing had occurred
wherein all the concerned parties had been
given the opportunity to present their
arguments and evidence in support and in
rebuttal of the application for damages. The
premature award of damages does not negate
the fact that the parties were accorded due
process, and indeed availed of their right to be
heard.
Moreover, we are compelled to appreciate the
particular circumstance in this case that the
right of private respondents to acquire relief
through the award of damages on account of the
wrongful preliminary attachment has been
conclusively affirmed by the highest court of the
land. This differs from the normal situation
under Section 20, Rule 57 wherein the court
having jurisdiction over the main action is still
required to ascertain whether the applicant
actually has a right to damages. To mandatorily
require that the award of damages be included
in the judgment in the main case makes all the
sense if the right to damages would be
ascertained at the same time the main
judgment is made. However, when the said
right is already made viable by reason of a final
judgment which is no longer subject to review,
there should be no unnecessary impediments to
its immediate implementation.
And finally, any ruling on our part voiding the
award of damages solely for the reason that it
was not included in the judgment on the main
case, and remanding the motion to the Court of
Appeals for proper adjudication together with
the main case may exhibit fealty to the letter of
the procedural rule, but not its avowed aims of
promoting a just and speedy disposition of
every action and proceeding. After all, if we
were to compel the Court of Appeals to decide
again on the application for damages and
incorporate its ruling in the judgment on the
main action, the appellate court will be
examining exactly the same evidence and
applying exactly the same rules as it already did
when it issued the assailed resolution awarding
damages on the bond. This would be
unnecessarily redundant especially considering
that the Supreme Court had already affirmed
that there was wrongful attachment in this case.
There is also the fact that remanding the
question of damages, singly for the purpose of
adhering to the letter of the procedural rule,
would further prolong the resolution of the main
case, which has been with the Court of Appeals
for more than nine years now.54 Our Rules of
Court precisely requires liberal construction of
the procedural rules to promote the objective of
securing a just, speedy and inexpensive
disposition of every action and proceeding.55
With this precept, all the more justification is
supplied for allowing the award for damages
despite its apparent prematurity, if it is in all
other respects proper.
The same reasons apply in resolving the
question of whether the Court of Appeals could
have decided the Motion for Judgment on the
Attachment Bond considering that the case had
not yet been re-raffled under the two-raffle
system for study and report. Under Section 5,
Rule 3 of the RIRCA, a case filed with the Court
of Appeals undergoes two raffles for assignment
to a particular Justice. The first raffle is made
for completion of records.56 Afterwards, "all
raffled appealed cases, the records of which
have been completed and submitted for
decision, shall be re-raffled for assignment to a
Justice for study and report."57
The fact that Section 20, Rule 57 provides that
the award of damages on the attachment bond
"shall be included in the judgment on the main
case" necessarily implies that it is to be made
only after the case has been re-raffled for study
and report, and concurrently decided with the
judgment of the ponente in the main case.
Again, the Court of Appeals failed to consider
Section 20, Rule 57 when it acted upon the
application even before the second raffle was
made.
Had Section 20, Rule 57 been faithfully complied
with, a different Justice of the Court of Appeals
would have penned the ruling on the application
for damages, in accordance with the RIRCA. Yet
this circumstance does not outweigh the other
considerations earlier mentioned that would
warrant a liberal interpretation of the procedural
rules in favor of respondents. The parties had
adduced all their arguments and evidence
before the Court of Appeals, and indeed, these
were appreciated on first instance by Justice
Demetria, who eventually penned the assailed
resolutions. There was already a final
determination that the attachment was
wrongful. And any delay brought about by
requiring that it be the ponencia, determined
after the second raffle, who decides the
application for damages may bear pro forma
adherence to the letter of the rule, but would
only cause the delay of the resolution of this
long-pending case. Procedural rules are
designed, and must therefore be so interpreted
as, to give effect to lawful and valid claims and
not to frustrate them.58
Even SIDDCOR acknowledges that there are
recognized instances where the award of
damages or judgment on the attachment bond
may not be included in the decision on the main
case, such as if the main case was dismissed for
lack of jurisdiction and no claim for damages
could have been presented in the main case.59
Scope of Damages
Properly Awardable
Next, we examine the particular award of
damages made in this case, consisting of
₱15,384,509.98, plus interest, as well as
₱1,000,000.00 as attorney’s fees. There seems
to be no dispute that the former amount
constituted the amount drawn against the
account of Sandoval by reason of the writ of
execution issued by the trial court on 27 May
1996. This fact was confirmed by the PNB, in its
Manifestation dated 19 July 1996, confirming
the garnishment.
Respondents’ burden in proving damages in this
case was considerably lessened by the fact that
there was already a final judgment, no longer
subject to review, that the preliminary
attachment allowed by the trial court was
indeed wrongful. Hence, all that was necessary
to be proved was the amount of damage
actually sustained by respondents by reason of
the wrongful attachment. It is unquestioned
that by virtue of the writ of preliminary
attachment, a Notice of Garnishment was
served upon the PNB over deposit accounts
maintained by respondents. Said Notice of
Garnishment placed under the control of the
RTC all the accounts maintained by
respondents, and prevented the transfer or
disposition of these accounts.60 Then the
subsequent Writ of Execution dated 27 May
1996 ordered the delivery to Carlos of these
accounts earlier subjected to garnishment.61
Clearly, the amount of actual pecuniary loss
sustained by respondents has been well
established. The Manifestation submitted by the
PNB further affirmed the actual amount seized
by Carlos, an amount which could not have been
acquired had it not been for the writ of
preliminary attachment which was wrongfully
issued.
Carlos lamely argues in his petition that there
was no concrete or supporting evidence to
justify the amount of actual damages, a claim
that is belied by the official case records. The
more substantive argument is presented by
SIDDCOR, which submits that any damages that
may be awarded to respondents can include
only those that were incurred, if any, during the
pendency of the appeal. But this contention is
belied by Section 4, Rule 57 of the 1997 Rules
of Civil Procedure, which provides that the bond
issued for preliminary attachment is conditioned
that the applicant "will pay all the costs which
may be adjudged to the adverse party and all
damages which he may sustain by reason
of the attachment, if the court shall finally
adjudge that the applicant was not entitled
thereto."62
The case Paramount Insurance Corp. v. Court of
Appeals63 is instructive. It discusses the scope
of the bond executed by upon an application for
preliminary injunction,64 which similarly covers
"all damages which [may be] sustain[ed] by
reason of the injunction or temporary
restraining order if the court should finally
decide that the applicant was not entitled
thereto."65 The surety in that case claimed that
it could be liable "only to the amount of
damages accruing from the time the injunction
bond was issued until the termination of the
case, and not from the time the suit was
commenced."66 In rebutting this claim, the
Court ruled:
. . . . Rule 58, Section 4(b), provides that a bond
is executed in favor of the party enjoined to
answer for all damages which he may sustain by
reason of the injunction. This Court already had
occasion to rule on this matter in Mendoza v.
Cruz, where it held that "(t)he injunction bond
is intended as a security for damages in case it
is finally decided that the injunction ought not
to have been granted. It is designed to cover
all damages which the party enjoined can
possibly suffer. Its principal purpose is to
protect the enjoined party against loss or
damage by reason of an injunction." No
distinction was made as to when the
damages should have been incurred.67
Our ruling in Philippine Charter Insurance Corp.
v. Court of Appeals, relied upon by the Court of
Appeals, squarely applies to this case:
Under the circumstances, too, there can be no
gainsaying the surety’s full awareness of its
undertakings under its bond: that, as the law
puts it: "the plaintiff will pay all costs which may
be adjudged to the defendant(s), and all
damages which may be sustained by reason of
the attachment, if the same shall finally be
adjudged to have been wrongful and without
cause," and that those damages plainly
comprehended not only those sustained during
the trial of the action but also those during the
pendency of the appeal. This is the law, and this
is how the surety's liability should be
understood. The surety's liability may be
enforced whether the application for damages
for wrongful attachment be submitted in the
original proceedings before the Trial Court, or
on appeal, so long as the judgment has not
become executory. The surety's liability is
not and cannot be limited to the damages
caused by the improper attachment only
during the pendency of the appeal. That
would be absurd. The plain and patent
intendment of the law is that the surety
shall answer for all damages that the party
may suffer as a result of the illicit
attachment, for all the time that the
attachment was in force; from levy to
dissolution. . . .
The fact that the second paragraph of the
rule speaks only of "damages sustained
during the pendency of the appeal" is of no
moment; it obviously proceeds from the
assumption in the first paragraph that the
award for the damages suffered during the
pendency of the case in the trial court was
in fact "included in the final judgment" (or
applied for therein before the appeal was
perfected or the judgment became executory);
hence, it states that the damages additionally
suffered thereafter, i.e., during the pendency of
the appeal, should be claimed before the
judgment of the appellate tribunal becomes
executory. It however bears repeating that
where. as in the case at bar, the judgment
of the Trial Court has expressly or
impliedly sustained the attachment and
thus has given rise to no occasion to speak
of, much less, file an application for
damages for wrongful attachment, and it is
only in the decision of the Court of Appeals
that the attachment is declared wrongful
and that the applicant "was not entitled
thereto," the rule is, as it should be, that it
is entirely proper at this time for the
application for damages for such wrongful
attachment to be filed—i.e., for all the
damages sustained thereby, during all the
time that it was in force, not only during
the pendency of the appeal. . . .68
The rule is thus well-settled that the bond issued
upon an application for preliminary attachment
answers for all damages, incurred at whatever
stage, which are sustained by reason of the
attachment. The award of actual damages by
the Court of Appeals is thus proper in amount.
However, we disagree that the rate of legal
interest be counted from the date of the
"unlawful garnishment," or on 27 June 1996.
Properly, interest should start to accrue only
from the moment it had been finally determined
that the attachment was unlawful, since it is on
that basis that the right to damages comes to
existence. In this case, legal interest
commences from the date the Court of Appeals
decision in CA-G.R. SP No. 39267 became final,
by reason of its affirmation by this Court.
The award of attorney’s fees in the amount of
₱1,000,000.00 is also questioned before this
Court, considering that the Court of Appeals did
not award moral or exemplary damages. The
general rule may be that an award of attorney’s
fees should be deleted where the award of moral
and exemplary damages are eliminated.69
Nonetheless, attorney’s fees may be awarded
under the Civil Code where the court deems it
just and equitable that attorney’s fees and
expenses of litigation should be recovered,70
even if moral and exemplary damages are
unavailing.71
Particularly, the Court has recognized as just
and equitable that attorney's fees be awarded
when a party is compelled to incur expenses to
lift a wrongfully issued writ of attachment.72 The
amount of money garnished, and the length of
time respondents have been deprived from use
of their money by reason of the wrongful
attachment, all militate towards a finding that
attorney’s fees are just and equitable under the
circumstances. However, we deem the amount
of ₱1,000,000.00 as excessive, and modify the
award of attorney’s fees to ₱500,000.00 which
represents merely approximately three percent
of the actual damages suffered by and awarded
to respondents. We also delete the imposition of
legal interest made by the Court of Appeals on
the awarded attorney’s fees.
Other Issues Raised in G.R. No. 135830
The issues raised in G.R. No. 136035 have been
dispensed with, and the remaining issues in
G.R. No. 135830 are relatively minor. There is
no need to dwell at length on them.
Carlos insists that respondents were liable to
have paid docket fees upon filing of their Motion
for Judgment on Attachment Bond, on the
theory that they claimed therein for the first
time the alleged damages resulting from the
dissolved attachment. The said motion is
characterized as an initiatory proceeding
because it is claimed therein for the first time,
the damages arising from the attachment. In
the same vein, Carlos argues that the absence
of a certification against forum-shopping
attached to the motion renders the said motion
as fatal. Again, it is pointed out that initiatory
pleadings must contain the said certification
against forum-shopping.
Our ruling in Santo Tomas University Hospital v.
Surla73 is instructive. It was argued therein that
the requirement of the certification against
forum-shopping, as contained in Administrative
Circular No. 04-94,74 covered compulsory
counterclaims. The Court ruled otherwise:
It bears stressing, once again, that the real
office of Administrative Circular No. 04-94,
made effective on 01 April 1994, is to curb the
malpractice commonly referred to also as
forum-shopping. . . . The language of the
circular distinctly suggests that it is primarily
intended to cover an initiatory pleading or an
incipient application of a party asserting a claim
for relief.
It should not be too difficult, the foregoing
rationale of the circular aptly taken, to
sustain the view that the circular in
question has not, in fact, been
contemplated to include a kind of claim
which, by its very nature as being auxiliary
to the proceeding in the suit and as
deriving its substantive and jurisdictional
support therefrom, can only be
appropriately pleaded in the answer and
not remain outstanding for independent
resolution except by the court where the
main case pends. Prescinding from the
foregoing, the proviso in the second paragraph
of Section 5, Rule 8, of the 1997 Rules of Civil
Procedure, i.e., that the violation of the anti-
forum shopping rule "shall not be curable by
mere amendment . . . but shall be cause for the
dismissal of the case without prejudice," being
predicated on the applicability of the need for a
certification against forum shopping, obviously
does not include a claim which cannot be
independently set up.75 (Emphasis supplied.)
It is clear that under Section 20, Rule 57, the
application for damages on the attachment
bond cannot be independently set up, but must
be filed in the main case, before the judgment
therein becomes final and executory. Santo
Tomas squarely applies in determining that no
certification against forum-shopping was
required in the Motion for Judgment on the
Attachment Bond. The same reasoning also
sustains a ruling that neither legal fees were
required for the filing of the said motion. Section
1, Rule 141 of the Rules of Court provides that
legal fees are prescribed upon the filing of the
pleading or other application which initiates an
action or proceeding.76 Since the said
application for judgment on the attachment
bond cannot be considered as an initiatory
pleading, as it cannot be independently set up
from the main action, it is not likewise
chargeable with legal fees.
As to the issue relating to the other Resolution
dated 26 June 1998 denying the motion to
dismiss appeal on the ground of forum-
shopping, we find Carlos’s arguments as
unmeritorious. Forum-shopping allegedly
existed because petitioners had filed two cases
before the Court of Appeals, CA-G.R. CV No.
53229, and the Petition for Certiorari with
Temporary Restraining Order dated 2 June 1996
attacking the allowance of execution pending
appeal. Evidently, the two causes of action in
these two petitions are different, CA-G.R. CV
No. 53229 being an appeal from the Summary
Judgment rendered by the RTC, and the second
petition assailing the subsequent allowance by
the RTC of execution pending appeal. There is
no identity between these two causes of action
that would warrant a finding of forum-shopping.
Issues Raised in G.R. No. 137743
To recount, respondents, having obtained a
favorable decision on their Motion for Judgment
on the Attachment Bond, filed a Motion for
Immediate Execution of the award of damages.
This was granted by the Court of Appeals in its
Resolution dated 16 October 1998, said
resolution now specifically assailed by SIDDCOR
in G.R. No. 137743.
In their Motion for Immediate Execution,
respondents’ theory in seeking the immediate
execution of the award of damages was that
said award was not subject to appeal, the ruling
thereupon being an interlocutory order.77 This
position was not adopted by the Court of
Appeals in its 16 October 1998 Resolution,
which was otherwise favorably disposed to
respondents. Instead, the Court of Appeals
predicated the immediate execution on the
following grounds: (1) that the judicial finding
that the writ of preliminary attachment was
wrongful was already final and beyond review;
(2) there were no material and substantial
defenses against the motion for the issuance of
the judgment bond; (3) Sandoval was elderly
and sickly, without means of livelihood and may
not be able to enjoy the fruits of the judgment
on the attachment bond; (4) that immediate
execution would end her suffering caused by the
arbitrary garnishment of her PNB account.
There is no doubt that a judgment on the
attachment bond is a final and appealable order.
As stated earlier, it is, under normal course,
included in the main judgment, which in turn is
final and appealable. Respondents admit that
they had erred in earlier characterizing the said
judgment as an interlocutory order. Still,
SIDDCOR argues that such earlier error is fatal,
and that the Court of Appeals abused its
discretion in ruling on the motion on a theory
different from that urged on by respondents.
By no means could respondents be deemed as
estopped from changing their legal theory, since
the rule on estoppel applies to questions of fact
and not questions of law.78 Moreover, courts are
empowered to decide cases even if the parties
raise legal rationales other than that which
would actually apply in the case. The basis of
whether respondents are entitled to immediate
execution arises from law, particularly Section
2(a), Rule 39 of the Rules of Court, and not
solely on whatever allegations may be raised by
the movant.
Thus, we find no grave abuse of discretion on
the part of the Court of Appeals, even though it
allowed execution pending appeal on a legal
basis different from that originally adduced by
respondents. After all, the reasoning ultimately
employed by the appellate court is correct, and
it hardly would be judicious to require the lower
court to adhere to the movant’s erroneous
ratiocination and preclude the proper
application of the law.
We need not review in length the justification of
the Court of Appeals in allowing execution
pending appeal. The standard set under Section
2(a), Rule 39 merely requires "good reasons," a
"special order," and "due hearing." Due hearing
would not require a hearing in open court, but
simply the right to be heard, which SIDDCOR
availed of when it filed its opposition to the
motion for immediate execution. The Resolution
dated 16 October 1998 satisfies the "special
order" requirement, and it does enumerate at
length the "good reasons" for allowing execution
pending appeal. As to the appreciation of "good
reasons," we simply note that the advanced age
alone of Sandoval would have sufficiently
justified execution pending appeal, pursuant to
the well-settled jurisprudential rule.79 The
wrongfulness of the attachment, and the length
of time respondents have been deprived of their
money by reason of the wrongful attachment
further justifies execution pending appeal under
these circumstances.
WHEREFORE, the petitions are DISMISSED. The
Temporary Restraining Order issued in the
Resolution dated 9 June 1999 is hereby LIFTED.
The assailed Resolution of the Court of Appeals
Special Fourth Division dated 26 June 1998 is
AFFIRMED with the MODIFICATIONS that the
legal interest on the award of actual damages
should commence from the date of the finality
of the Decision of the Court of Appeals in CA
G.R. SP No. 39267 and that the award of
attorney’s fees is in the amount of ₱500,000.
Costs against petitioners.
SO ORDERED.